Deed of assignment

Hello, I own a property with a mortgage solely in my name. It is currently rented out. I’m in the high tax bracket whilst my wife isn’t. If I get a deed of assignment and assign 100% of the beneficial interest to my wife, she can receive all of the rental income and pay the appropriate tax. The deed of assignment does not need to be sent to HMRC but I do need a copy incase they request it. There’s no need to update the land registry and there’ll be no capital gains tax to pay. Is all the above accurate? Final point. I’m self employed and provide a self assessment every year, even though my wife will receive the rental income can I claim the 100% of the mortgage interest as an expense as the mortgage is in my name and paid by me?

Hi,
You must complete and return a Form 17 available at Declare beneficial interests in joint property and income, you’ll also need to provide evidence that your beneficial interests in the property are unequal, for example a declaration or the deed of assignment you have.
Guidance regarding this is available at- TSEM9852 - Form 17 rule - how couple make declaration
As your wife’s share would be 100% of the beneficial interest, so too would be the expenses, therefore, you would not be able to claim relief on mortgage interest.  
Thank you.
 

Hello, The property is owned by myself. My wife isn’t in the mortgage or deeds.

Hi,

Please can you advise what your enquiry is?

Thank you

Hi, I just want to make sure the below is correct I own a property with a mortgage solely in my name. It is currently rented out. I’m in the high tax bracket whilst my wife isn’t. If I get a deed of assignment and assign 100% of the beneficial interest to my wife, she can receive all of the rental income and pay the appropriate tax. The deed of assignment does not need to be sent to HMRC but I do need a copy incase they request it. There’s no need to update the land registry and there’ll be no capital gains tax to pay. Is all the above accurate? Final point. I’m self employed and provide a self assessment every year, even though my wife will receive the rental income can I claim the 100% of the mortgage interest as an expense as the mortgage is in my name and paid by me?

Hi,

Thank you for your question. A Declaration of Trust is a legally binding document that creates a trust. Most types of trust giving an interest in property to somebody who is not the legal owner

now need to be registered with HMRC via the Trust Registration Service. You can find guidance on the registration requirements and how to register here, Register a trust as a trustee -

GOV.UK (www.gov.uk). There is also more information about what types of trust need to be registered at TRSM23050 - Types of trust that need to be registered: contents: excluded express

trusts: contents: property ownership - HMRC internal manual - GOV.UK (www.gov.uk). There is no capital gain when a property is transferred between a husband and wife. Claim for interest

relief can only be made by the person that takes out the loan and pays the interest on the loan. Please see:

Savings and Investment Manual

Thank you.

Okay thanks. What is difference in a declaration of trust and a deed of assignment? I’ve been advised a deed of assignment will suffice for this purpose.

Hi ,
 

Thank you for your question. Unlike a deed of trust that is drafted at the point of purchase, a deed of assignment is drafted at the point you own the property and want to assign some or all of your ownership to someone else . Thank you .

Hi, My husband owns a property solely in his name and is a higher tax payer, we wish use a Deed of Assignment to assign 100% of the beneficial interest to me, as I pay a lower rate of tax. Would I need to pay Capital Gains Tax or stamp duty on this? Many thanks

Hi Jennifer,
You will not pay capital gains until the property is sold.
For stamp duty, please refer to Stamp Duty Land Tax
Thank you.

Deed of Assignment Dear HMRC, I came across the articles on internet: https://www.samconveyancing.co.uk/news/conveyancing/transfer-rental-income-to-spouse https://www.samconveyancing.co.uk/news/conveyancing/deed-of-assignment-transfer-your-beneficial-interest-in-property-8197 If I transfer 100% of beneficial interest (also known as Equitable interest) on a buy to let residential property in Wales which I legally own in my sole name as a UK higher rate taxpayer with an outstanding mortgage to my spouse (wife) who is a UK basic rate taxpayer. Please confirm if each of the following points are correct and True. Please provide correction if any of the points are misunderstood and false for my situation: 1. There will be no Capital Gain Tax (CGT) payable on execution of this Deed of assignment. 2. There will be no Land Transaction Tax (LTT) payable on execution of this Deed of assignment. 3. As I will still be holding a legal title on the property, the mortgage lender's consent is not required for the Deed of assignment. 4. Form 17 will need to be submitted to HMRC within 60 days of execution of the Deed of assignment. 5. My spouse will be liable for income tax on rental income received for this property on or after the execution of the Deed of assignment. She will be able to deduct all expenses related to the rental property like insurance, maintenance, etc. 6. My Spouse will not be able to claim the mortgage interest expense against the rental income of this property as she will not be on the mortgage deeds and as I, legal owner took the loan out and I will continue to pay the mortgage payments and interest. 7. My spouse will also be liable of CGT if and when the property is sold after the execution of the Deed of assignment unless the assignment is surrendered or deed of variation is signed by my spouse in the future. 8. HMRC does not deem the Deed of assignment to transfer the rental income between married couples as Tax avoidance or tax evasion. 9. We do not need to register deed of assignment as Trust with HMRC’s - Trust Registration Service or Register a Trust as Trustee. Thank very much in advance for your help.

Hi,

1. Assets transferred between spouses are on a no gain no loss principal.
2. We do not give advice on Stamp Duty or Land Transaction Tax on this forum. There is however guidance here: Land Transaction Tax
3. You will need to check with you mortgage provider.
4. Yes, a Form 17 will need to be submitted to HMRC within 60 days of the execution of the deed of assignment.
5. Yes, your spouse will be liable for Income Tax on rental income received for this property on or after the execution of the deed of assignment. Your spouse will be able to deduct all allowable expenses related to the rental property. This is provided that you transfer 100% of the property income to your wife. The guidance is here: Work out your rental income when you let property
6. Yes, that is correct. Your spouse who now has 100% beneficial interest will not be able to claim relief on the interest because the loan is not in her name. The guidance is here:    SAIM10030 - Relief for interest paid: general conditions: the claimant
7. The Capital Gains Tax owing will be based on the legal ownership at the time of the sale not on the beneficial ownership of the property income. If you still own 100% of the property and your wife is entitled to 100% of the beneficial interests, you will be liable for the Capital Gains Tax, not your wife.
8. No, we do not deem the form 17 and deed of trust to be tax avoidance or tax evasion.
9. Most types of trusts giving an interest in property to somebody who is not the legal owner now need to be registered with HMRC through the Trust Registration Service. You can find guidance on the registration requirements and how to register here: Register a trust as a trustee. There is also more information about what type of trusts need to be registered here: TRSM23050 - Types of trust that need to be registered: contents: excluded express trusts: contents: property ownership

Thank you.

Private Residents Relief, CGT and Deed of Assignment. Dear HMRC, Thank you for your response. I wish to clarify further on following points CGT and PPR: 7. This contradicts the response provided 2 months ago by HMRC Admin 18 https://community.hmrc.gov.uk/customerforums/cgt/51bb111b-6c6f-ef11-a4e5-000d3a86d651#035b2817-6c6f-ef11-a671-6045bd13c60b Please confirm if the CGT will be due to be paid by wife (100% on sale of this property after the execution of deed of assignment, as I intend to transfer 100% of beneficial interest to her unless she surrenders the deed of assignment or deed of variation is signed by my spouse back to me before such sale. 10. Principal Private Residents Relief (PPR): I bought this current BTL property in Aug-17 in my sole name and previously lived in this property till Aug-20, (36 months) subsequently it was either let out or unoccupied / empty. I bought another property (Flat) in Feb-20 again in sole name and lived in this flat from Sep-20 to date. I was married to my wife in Dec-13. After execution of the deed of assignment (100% beneficial interest to my wife), can PPR relief be claimed for 36months + 9 months as per the current rules and in what share? Thank very much in advance for your help.

Hi,
Your period of ownership begins on the date you first acquired the property or on 31 March 1982 if that is later. It ends when you dispose of it. The final 9 months of your period of ownership always qualify for relief regardless of how you use the property in that time as long as the property has been your only or main residence at some point. The guidance is here:
HS283 Private Residence Relief (2024)
I have double checked with a Technical Inspector and the initial advice I gave you was incorrect. The capital gains is chargeable on the person who is the beneficial owner of the asset which has been disposed of.
CG10720 - Persons chargeable: beneficial owner
The same person may be both legal owner and beneficial owner of the property but there can be a separation of the two. Please refer to:
TSEM9120 - Ownership and income tax: legal background: ownership - legal owner
TSEM9130 - Ownership and income tax: legal background: ownership - beneficial owner
Thank you