Declaration of trust - transfer of rental income

Hi, I own a propertry that is let. I would like to make a Declaration of Trust to transfer 100% of the rental income to my adult son. My question is regarding the rental income for taxation purposes. Will the transferred rental income be pre tax or post tax? I read somewhere that I can only transfer post tax income, which makes me question whether the income will be taxed twice - once on my Self Assessment and then on my son's. I hope this makes sense. Best Regards.

Hi,
You are correct that for your son to be a beneficial owner of the property, a deed of trust must be completed and that the property deeds will also need to be updated accordingly. The date the deed of trust is signed and witnessed, becomes the date in which liability for the income will change. Therefore, you will be liable for rental income received from the 6 April to the date the deed is signed. Then it is the responsibility for each beneficial owner to declare the income accordingly.
Thank you.

Hi, Thanks for the reply. I wasn't aware I would need to complete a deed of trust and update the property deeds. Is it not possible to write a simple declaration of trust as described in TSEM9520 to transfer beneficial interests (rental income) to my son and yet retain legal ownership? Best Regards.

Hi,
Yes you can draw up a declaration as set out here:
TSEM9520 - Ownership and income tax: express trusts - written declaration
You do not need to submit this to HMRC but must keep a copy for your records as this may be requested at a later date.
Thank you.

Hi, Thanks for the reply. And would the tax implications for a declaration of trust be the same as those for a deed of trust as you described earlier? "The date the deed of trust is signed and witnessed, becomes the date in which liability for the income will change. Therefore, you will be liable for rental income received from the 6 April to the date the deed is signed. Then it is the responsibility for each beneficial owner to declare the income accordingly." I just want to be sure the full rental income will be transferred to my son, and not the post tax rental income. I don't want us to pay tax twice on this income obviously. Thanks again. Best Regards.

Hi ,
 

Thank you for your question.  Yes, that is correct as we previously stated.   You will be liable for rental income received from the 06 April to the date the Deed is signed. Then it is the responsibility for each beneficial owner to declare the income accordingly. Thank you .