Declaration of Trust/Deed of Trust/Deed of Assignment – which one for rental income?

Hello, I just wanted to get some clarification regarding the above. I am a sole owner of a rental property and my wife will be receiving 100% of the rental income. I wanted to know what written agreement we need to have in place for HMRC. I want to continue to own the property in my sole name, it is just for my wife to receive the rental income fully and for her to complete her self-assessment each financial year. Also, in the agreement what things will HMRC want to see written? Thank you

Hi,

The declaration of trust will satisfy HMRC to show how you wish the allocate your rental profits to your partner.  You will need to also complete a Form 17 indicating the unequal share of this rental income to your partner. You can see guidance here:

Declare beneficial interests in joint property and income

Thank you

Hi, Form 17 only applies to those who jointly own properties with their spouses or civil partners. In my case, I solely own the property in my name so this does not apply to me. I just wanted to double-check. In our situation, will a Declaration of Trust be valid where I wish to allocate the full 100% rental income to my wife? Please note, that my wife and I are civilly married in the UK. Lastly, what specific information and details must be included in the Declaration of Trust and can this document be written by us or does it need to be written by a legal professional such as solicitor? Thank you

Hi,

You kindly explained that you are the 100% owner of the property/asset. In general law there are two types of ownership, legal and beneficial. The same person may be both legal owner and beneficial owner of the property, but there can be a separation of the two.

For land and buildings, the legal owner is the person/s in whose name/s the property is held or registered in the Land Registry (in England and Wales). The beneficial owner is the person for whose benefit the property is held. It is distinguished from the person in whose name the property is held (the legal owner). The beneficial owner is sometimes referred to as having a ‘beneficial interest’ in the property. The starting point is that the legal owner is presumed to be the beneficial owner unless there is evidence to the contrary The onus is upon the person seeking to show that the beneficial ownership is different from the legal ownership.

As we read your question, we cannot recommend a form 17 as this is in regard to creating unequal shares in a property that is owned jointly (presumed to be 50/50). There is no co-ownership so consequently a deed of trust will not be suitable. A change of ownership therefore requires Land Registry amendment.

Thank you.

I have read the above question and answer regarding the allocation of beneficial interest in a property and it has prompted me to ask my position as I it differs from what I was proposing to do. I am the sole owner of a property which is leasehold and I let it out currently to an elderly disabled person. I declare all the net income on my self assessment form and the Tax is collected by PAYEE. Next financial year I want to transfer 100% of the net income to my wife who would then declare that income on her own self assessment form and have PAYEE collect the Tax. As I am the sole owner I had read that I needed to prepare a Deed of Assignment as the whole of the beneficial interest is involved. Am I correct in assuming this and does that have to be drawn up by a solicitor or can I do it myself. I have also read that I don't need to send that to yourselves but need to hold onto it in case you want to see it in the future. Again are my assumptions correct please. If necessary I would be prepared to speak to someone if you feel that necessary and if that is the case I would appreciate the necessary contact details. Thanks in advance for your help