Deed of trust - Transfer UK property income to a spouse and reduce your tax liability to HMRC
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- Опубліковано 25 сер 2024
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#Tax #HMRC #Property
In this video you will learn about
- What is a deed of trust
- What is a form 17?
- How can a deed of trust and form 17 help UK landlords to reduce property tax?
Capital Gains Tax Calculator £9.95: bit.ly/2XkxbTF CGT 30 days reporting: ua-cam.com/video/T4YIvGUCAdI/v-deo.html
If you are a joint owner of a buy to let with your wife which is 50%/50% owned and you were claiming 100% of the tax by yourself and now want to divide the property income 50/50 between the two of you do you have to do the deed of trust or not. Not very clear what you implied
Worth a watch: ua-cam.com/video/2A4T8o6mqxo/v-deo.html
Please do not jump straight into it
Hi Simon
Thank you for the great video. Can you help us to draft the DOT or do you know anyone please?
A local solicitor will help you with that
When declaring the Capital Gain to HMRC, isn't the gain made by John worked out from the point at which the Deed of Trust was created until the sale i.e. you provide an estimate of the property value when the Deed of Trust was made?
It’s possible to alleviate CGT using your IHT lifetime allowances, using a tax specialist t provide the relevant letters
@@UK-Property-Tax-Accountants Thanks for the reply. I just spoke to HMRC and if the couple are married, then the acquisition history is automatically passed to the spouse for CGT reporting purposes. You declare it as a Gift from the point in which the property was bought and not from the creation of the Deed of Trust. www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg22200
Thanks for this video Simon! And all your other videos, they've been very helpful in understanding the CGT process (currently studying Advanced Taxation). Just wanted to clarify, do you have to go through the DOT and form17 process before the chargeable gain occurs or can this be done afterwards (e.g. sell the property, work out how much gains has been made and then work out the most effecient way to split the ownership).
Thanks.
You have to do a deed of trust which splits the ownership and income of the property between two parties or even more
A form 17 is required when you are changing the ownership of a property from 50 50
Great video, can you do a similar deed of trust with a limited company instead of a partner ie transfer 1% ownership into a company and setup a deed of trust to allow the business to take 50% or 100% of the income? Thanks in advance
I would not do that with GAAR, HMRC tax evasion
Hi great video. If you have property solely owned and mortgage in your sole name - you wish to transfer 50% income to spouse then deed of trust can be used to transfer 1% equity to wife. In absence of form 17 you can split income 50/50 and would avoid stamp duty. (Deed of trust was done before stamp duty holiday). Is that all correct?
This is all possible but please do speak with your accountant beforehand to ensure things are done in a certain order
Hi simon, can you advise why you would do a deed of trust and not just an equity transfer with the land registry? This is if you want to give your spouse 50% of a property.
The deed of trust is a beneficiary transfer, which is used for tax purposes. A land registry change is just a legal change and not tax relevant
Simon Misiewicz Your Finance & Tax Director thanks for you reply
Simon. But to confirm if you did do an equity transfer surely the spouse will now be able to take 50% of the rental income since they are legal owners of the property? Which also gives you a similar tax benefit to the above?
Also Simon how much do your company charge to set up a deed of trust?
We tend to charge £299.95. Please send an email to simon@pursertax.com
Not without a deed in placce
Great Video. I provided the funds for my parents to purchase their house in 1992 & the Solicitor did a Trust Deed with me as the "Purchaser" & my parents as the "Trustees". The Title Deeds are still in my parents names. My father passed away last month & my mother is 93 years young. Does the Trust guarantee my ownership of the property or should I transfer the house into my name or wait until my mother passes as would there be any Capital Gains Tax implications. I am retired now on a pension. Any advice would be helpful. Thanks in Advance.
It really depends on who lived in the property. Deeds have been set up to avoid tax but HMRC rule over them in certain circumstances. Speak with your lawyer quickly on this one
Hi Simon, great videos and very informative. I have a few questions. I sold a buy to let flat about 12 years ago and had to pay about 6k in CGT. But I didn't know at the time abut the CGT personal annual allowance. Q1 Was this allowance around at the time I sold my property. Q2 If so was this figure 12k. Q3 If the government didn't apply this annual CGT allowance to me at the time I sold my property can I claim the tax bill I paid back now with interest. Kind Regards Mr Alaba.
Hi Mr Alaba
You should have received an annual CGT allowance but if older than two years ago then I would call HMRC to see how you can get the overpaid tax back
Thank you. Is it possible to backdate the deed of trust to few years back to declare the rental income of the jointly owned property on my wife name?
Sadly not as it needs to be with HMRC within 60 days if a form 17 is required.
Details of form 17 and 60 days can be seen is in the video
@@UK-Property-Tax-Accountants Thank you very much.
I would like to talk to you regarding our tax situation and want to understand if you would be able to help?
Feel free to book some time with us to discuss your personal situation
www.optimiseaccountants.co.uk/consultation-free-service-discussion/
is this Deed of Trust or Trust Declaration need to be registered on the Trust Register in case of couples.
No need to register the trust document
@@UK-Property-Tax-Accountantsthanks for the reply 👍
@karthikeyanthirunavukkaras6343 you are welcome 🙏
I am confused. Please clarify:
1. Form HMRC 17 has to be completed if transfer is any amount % transfer, except 100%. Is that correct?
2. Does Form 17 apply in situation that the person contributed 50% of money to purchase but his/her name is not on the LR Title?
3. Your examples made me confused because CGT example referred to proportional split and income example referred to 100% assignment.
Can you use different % allocation for different split cases (CGT vs. income) regardless what % split stipulated?
4. Your fee for Trust, does it include filling HMRC form 17?
Hi Nikki
With the volume of questions it may be better to book a tax consultation with your tax advisor for them to explain how a deed of trust and form 17 works.
It is best to understand it fully. Sadly we would spend time going back and forth which is never that good in terms of spread or preventing your frustration
Discrepancy- How can you move property ownership to your spouse without moving some mortgage debt.?????
Why is it a discrepancy? Would you share your legal source?
If you are splitting income 50/50 between husband and wife - does it matter if mortgage is in name of one person? The mortgage cost can also be split 50/50?
You do need to check with your mortgage lender to ensure you are not breaking their terms and conditions
@@UK-Property-Tax-Accountants Thanks for your response. Assuming you are not breaking terms then it will be fine to split mortgage cost 50/50?
Yes but do check SDLT issues if mortgage is over £1m before 1st April 2021 (SDLT holiday period) and £250,000 after this date (please see deed of trust video on my channel for more details) www.optimiseaccountants.co.uk/knwbase/reduce-property-tax-transfer-income-to-a-spouse-using-a-deed-of-trust/.
Does this rule still apply to transfer rental income to a partner? Do we need to post the declaration of trust to hmrc? I'm struggling to find step by step process. Btw I own 100% of the property and has no mortgage
You only need to create a deed of trust. There is no need for a form 17. Therefore, you do not need to inform HMRC
@@UK-Property-Tax-Accountantsthank you, just to confirm do I need to register a trustee at gov web? Or simply by signing a declaration form is suffient enough?
There is no need to make any registration of this type
Hi Simon great video,
Is it possible to split the rental income 99:1 with my wife we have a mortgages on the BTL’s without having to pay CGT or SDLT ?
Can the actual ownership remain 50:50?
Or you would need to do is create a deed of trust and a form 17. You’re also need to speak to your bank to make sure that the mortgage does not change can figuration to avoid SDLT
@@UK-Property-Tax-Accountants okay thanks
All the details I mentioned are in the video do please do watch it again as a good refresher
can I just fill Deed of Trust form to transfer the rental income to a spouse? also whats the best to find out if I have valid Deed of trust on the property? I remember completing the form but never really chased it with HMRC and not received any acknowledgment from them
If you have not completed a form 17 and he did a trust properly hedge Marcie will ignore it.
This would suggest that it is nil and void
Great video - does a deed of trust need to be completed by a solicitor? I own 100% of a buy to let and want my wife to benefit fully from income, can I backdate the deed for the last tax year as no Form 17 is needed?
You are right. No form 17 required. Solicitors can do a deed of trust for about £250 to £300
I am pleased this video has the potential to save you some tax
Can one transfer the full 12,500 tax relief from wife who does work to the husband who is a high rate 40 percent tax payer without going through the deed of trust and form 17 route
Please see my other reply
is there a sldt to pay if you use a deed of trust for sole owned property to spouse who doesnt have any properties to their name and there is a btl mortgage on property?
Normally there would be. However, the first £500,000 there is no SDLT due to the holiday period. The 3% SDLT higher rate does not apply
Great videos thanks. How do you obtain a Deed of trust for property in order to pass property income and/or eventual net profits o your spouse? You say it is easy, but how? Is it only through a solicitor? I have asked 3 different lenders and they had no idea! In Scotland btw.
Not sure about Scotland sorry 😢
@@UK-Property-Tax-Accountants Ok thanks, but presume it would normally be a solicitor and not the lender who would draft up, as lender doesn't need to know.
Yes they do. You are always best to speak with an accountant, solicitor and mortgage broker before making significant changes.
Hi. If my friend owns a property and has a mortgage on it. Can he sign over 50% of the Propery to me without changing the mortgage which he wants to remain on his name.
It is possible to transfer a property to someone else using a deed of trust. Mortgage company will want to know who is the new owner is as there is a greater risk to them as a lender.
Can this be used between long terms living together partners?
You both have IHT allowances so I see no reason why this strategy could not work for you
Hi Simon, I have a buy to let property, which i have let out for about 2 years now. Recently, got married and wanted to include my wife on the deeds but do not want her to pay towards the mortgage due to her being disabled and out of work long term.
Wanted to know if this is possible? if so, how?
Thank you in advance.
Asif
Yes this is indeed possible, simply speak with your lender and seek permission
Do having shareholders within ltd company rather than directors make pulling out money at 7.5 percent tax possible? (Per shareholder that is)
It is just shareholders that take out dividends. Our clients are usually both directors and shareholders
@optimise accountants. Ok so is it best to increase amount of shareholders to pull out more money at 7.5% level. Meaning paying less tax overall ?
Most certainly
Hi please can I just get clarity on my situation. My husband and I own 50% each. He is currently not working so I want to transfer all of my 50% to him (no money is changing hands). The mortgage is a fixed 5-year mortgage so I assume no need to inform the bank. The mortgage will still continue in joint names. So do I just complete the form TR1 and ID1 with a £20 fee? What happens if I wanted to keep 1% and give him 49% ?
Your response would be very much appreciated. I have contacted three solicitors each has failed to get back to me. So I am trying to do it myself. I assume there is not enough money in it for them.
What you gave stated is partially correct. You will need a deed of trust and form 17 to conclude matters
Hi Simon, thanks for connecting. My self and a few at work have been watching some of your property tax advise videos on you tube. Great info indeed!! Thanks very much for sharing.
I thought I would reach out to see if you could answer a question I have.
You mentioned in your video regarding "passing 99% of buy to let income to a spouse"
I have a buy to let property soley in my name but for tax reasons am creating a deed of trust to pass the majority of income to my partner.
In your video you explained in this instance I would not need to file a Form 17 to HMRC . Is this still the case? I noticed the video was 9month ago and wanted to make sure what you mentioned is still valid.
Also what would be your charge for monthly PAYE pay roll for one employee, Via SPV company?
Thanks
Jonathan
Hi Jonny
Great question
A form 17 is required when a property is owned 50%/50% and you wish to change the share/income split.
This only really works when you are married.
@@UK-Property-Tax-Accountants Hi Simon thanks for your reply much appreciated.
You are welcome
Hi simon , my wife and I split up over ten years ago. I have always said she could have our jointly owned home,no mortgage, and now that time has arrived,. If I do an equity transfer with land registry to give her my half, are there any CGT implications for me or her should she decide to sell the property in future? Ps sorry need to add, we are still married And I solely own another property.
You can do a deed of trust between husband and wife without CGT. However, CGT will be payable if they later sell the property on.
Thanks for your reply. Who would be liable my wife or me?
To be honest I am not sure without knowing all the details, which is too much to go into on a community forum such as this
Can we use Form 17 and Deed of Trust on Joint tenancy for rental income split? If we can then do we need same % of Form 17 and DoT i.e. 1:99 keeping joint tenancy in tact and is it true DOT wont be registered at Land Registry? If we can't then would severing the joint tenancy be required, would DOT cover it all but chances are land registry might need to be informed along with lender if we move from JT to TIC? are there any concerns on land registry and lender might create issue if the legal ownership is changed since it can be seen as tranferring 49% of liabilites and incur SDLT.
Hi Alpha
By changing the split from 50/50 automatically means the property is now tenants in common. It is usual practice to update the land registry and inform the mortgage company. There would be a SDLT issue if you change mortgage arrangements.
Hi, I have a buy to let (which some 6 years back we used to live in as a family before we let it out). This was in my sole name but in 2016 I went via a solicitor and added my wife's name to it (and informed my mortgage company). In 2018 we remortgaged and it is still in mine and my wife's name and for tax purposes we share the rental income 50:50.
I am a higher rate tax payer and my wife is a housewife so it makes sense for her to have a higher share (99%) of the rental income with me retaining 1%. Can I increase her shares via a deed of trust? And if so will this incur stamp duty tax? Do I need to inform my mortgage company, land registry. Will I need to submit Form 17 to the HMRC
Yes you can do all the above, exactly in the way you described 🙌
Hi Ambeen, I am now in the same boat as you a year ago. How did it all go?
A deed of trust works to provided you use a form17 too
Can a deed of trust be changed if you want to change ownership split between spouses more than once? Is a deed of trust recognised overseas for tax purposes for rental income?
A deed of trust can be done many times over