Process of declaring beneficial ownership on a rental prop
Discussion
If my partner pays a lower marginal tax rate than I do, I understand I am able to tranfer beneficial (not legal) ownership of some rental properties into her name?
What form does the "notice" take, is it setup as a trust, or a deed, can it have an expiry date on it, etc?
What is the process to do this, and who needs to be informed other than HMRC? I had a quick look at http://www.hmrc.gov.uk/manuals/tsemmanual/tsem9150... but am none the wiser!
e.g.
Mortgage provider?
Land Registry?
Buildings insurer?
Will HMRC send acknowledgement, etc?
thks
What form does the "notice" take, is it setup as a trust, or a deed, can it have an expiry date on it, etc?
What is the process to do this, and who needs to be informed other than HMRC? I had a quick look at http://www.hmrc.gov.uk/manuals/tsemmanual/tsem9150... but am none the wiser!
e.g.
Mortgage provider?
Land Registry?
Buildings insurer?
Will HMRC send acknowledgement, etc?
thks
Are you trying to claim that you (an individual) are the registered owner of a property which is generating rental income but that your partner (an individual, to whom you are not married) is actually the beneficiary of the rents and should be paying tax on them rather than you ?
You've got two hopes...
The HMRC link you give refers to the use of trustee ownership for assets. Unless you are talking about six figure rental income streams the costs in establishing and managing that kind of setup will vastly exceed any personal income tax savings.
You've got two hopes...
The HMRC link you give refers to the use of trustee ownership for assets. Unless you are talking about six figure rental income streams the costs in establishing and managing that kind of setup will vastly exceed any personal income tax savings.
Newc said:
Are you trying to claim that you (an individual) are the registered owner of a property which is generating rental income but that your partner (an individual, to whom you are not married) is actually the beneficiary of the rents and should be paying tax on them rather than you ?
You've got two hopes...
The HMRC link you give refers to the use of trustee ownership for assets. Unless you are talking about six figure rental income streams the costs in establishing and managing that kind of setup will vastly exceed any personal income tax savings.
Yes. I have several friends who have done this (although are married), through their accountants for either single or double instances of rental properties.You've got two hopes...
The HMRC link you give refers to the use of trustee ownership for assets. Unless you are talking about six figure rental income streams the costs in establishing and managing that kind of setup will vastly exceed any personal income tax savings.
I'm not sure what difference not being married makes, assuming we are "common law" partners?
Per the example on the HMRC link, I'm not sure what "costs" are involved other than the simple declaration?
Eric Mc said:
The concept of "common law" partners, marriage etc does not exist in English Law.
In the eyes of the law, the default situation is that the two of you are complete strangers.
Is there anything exempting me from transfering beneficial (not legal) ownership of an asset, to a non related person?In the eyes of the law, the default situation is that the two of you are complete strangers.
The HMRC site is not clear on this as far as I can tell.
HMRC is perfectly clear on it, as was Eric and as I attempted to be earlier. Repeating the question because you don't like the answer doesn't change the situation.
You are not married. There is therefore no connection between you and your partner on the tax situation of ownership in HMRC's eyes. Your married friends are setting up tenants in common arrangements, which they can do because they are married.
You cannot 'transfer beneficial ownership while retaining title' to an individual. There's no such construct. If there was, do you think anyone anywhere would be paying 50% UK tax ?
Use of active trust structures is a complex and expensive business with a set of taxes and charges all of their own, and all sorts of gotchas around what you can and can't do with the assets.
You are not married. There is therefore no connection between you and your partner on the tax situation of ownership in HMRC's eyes. Your married friends are setting up tenants in common arrangements, which they can do because they are married.
You cannot 'transfer beneficial ownership while retaining title' to an individual. There's no such construct. If there was, do you think anyone anywhere would be paying 50% UK tax ?
Use of active trust structures is a complex and expensive business with a set of taxes and charges all of their own, and all sorts of gotchas around what you can and can't do with the assets.
Edited by Newc on Monday 4th February 12:36
Newc said:
HMRC is perfectly clear on it, as was Eric and as I attempted to be earlier. Repeating the question because you don't like the answer doesn't change the situation.
You are not married. There is therefore no connection between you and your partner on the tax situation of ownership in HMRC's eyes. Your married friends are setting up tenants in common arrangements, which they can do because they are married.
You cannot 'transfer beneficial ownership while retaining title' to an individual. There's no such construct. If there was, do you think anyone anywhere would be paying 50% UK tax ?
Use of active trust structures is a complex and expensive business with a set of taxes and charges all of their own, and all sorts of gotchas around what you can and can't do with the assets.
I hadn't repeated the question, due to "not liking the answer", but more to gain clarity, which you have now kindly provided. Neither of the answers previously answered this question, but perhaps alluded to it. You are not married. There is therefore no connection between you and your partner on the tax situation of ownership in HMRC's eyes. Your married friends are setting up tenants in common arrangements, which they can do because they are married.
You cannot 'transfer beneficial ownership while retaining title' to an individual. There's no such construct. If there was, do you think anyone anywhere would be paying 50% UK tax ?
Use of active trust structures is a complex and expensive business with a set of taxes and charges all of their own, and all sorts of gotchas around what you can and can't do with the assets.
Edited by Newc on Monday 4th February 12:36
Where a property is owned between tenants in common, (like our current house), is there anything to prevent beneficial title being transferred to one of the "tenants" (even when not married)?
If the flats were transfered into joint ownership, would this allow for the process of then transfering beneficial ownership? This is a genuine, rather than facetious question!
HMRC Trusts and Estates in Edinburgh are getting back to me shortly.
fergus said:
Newc said:
HMRC is perfectly clear on it, as was Eric and as I attempted to be earlier. Repeating the question because you don't like the answer doesn't change the situation.
You are not married. There is therefore no connection between you and your partner on the tax situation of ownership in HMRC's eyes. Your married friends are setting up tenants in common arrangements, which they can do because they are married.
You cannot 'transfer beneficial ownership while retaining title' to an individual. There's no such construct. If there was, do you think anyone anywhere would be paying 50% UK tax ?
Use of active trust structures is a complex and expensive business with a set of taxes and charges all of their own, and all sorts of gotchas around what you can and can't do with the assets.
I hadn't repeated the question, due to "not liking the answer", but more to gain clarity, which you have now kindly provided. Neither of the answers previously answered this question, but perhaps alluded to it. You are not married. There is therefore no connection between you and your partner on the tax situation of ownership in HMRC's eyes. Your married friends are setting up tenants in common arrangements, which they can do because they are married.
You cannot 'transfer beneficial ownership while retaining title' to an individual. There's no such construct. If there was, do you think anyone anywhere would be paying 50% UK tax ?
Use of active trust structures is a complex and expensive business with a set of taxes and charges all of their own, and all sorts of gotchas around what you can and can't do with the assets.
Where a property is owned between tenants in common, (like our current house), is there anything to prevent beneficial title being transferred to one of the "tenants" (even when not married)?
If the flats were transfered into joint ownership, would this allow for the process of then transfering beneficial ownership? This is a genuine, rather than facetious question!
HMRC Trusts and Estates in Edinburgh are getting back to me shortly.
Your suggestions require a trust in the middle. They are probably all viable and legal, but I don’t have enough knowledge of trusts to comment in detail. I can’t stress enough though that you are going down a very complex route.
Thks for replying.
This link suggests all may not be lost (re the unmarried persons bit): http://www.rossmartin.co.uk/index.php/land-a-prope...
This link suggests all may not be lost (re the unmarried persons bit): http://www.rossmartin.co.uk/index.php/land-a-prope...
I was intending to post back on this thread earlier but didn't see that the OP had replied to my initial query.
As others have alluded, the basic fact is for tax purposes you are strangers in which case any transfer of ownership would be deemed by HMRC to be at "open market value" and not at a "no gain/loss value" which it is for inter-spouse transfers.
So you would be in a position that Capital Gaibs Tax would be paid on any "gain" albeit you are not in receipt of any funds.
Additionally, the transfer is a PET for IHT purposes and would become chargeable if you died within 7 years.
Form 17 doesn't effect the liability arising on you because of your non-married status - read the first line at the top of the commentary!
David
As others have alluded, the basic fact is for tax purposes you are strangers in which case any transfer of ownership would be deemed by HMRC to be at "open market value" and not at a "no gain/loss value" which it is for inter-spouse transfers.
So you would be in a position that Capital Gaibs Tax would be paid on any "gain" albeit you are not in receipt of any funds.
Additionally, the transfer is a PET for IHT purposes and would become chargeable if you died within 7 years.
Form 17 doesn't effect the liability arising on you because of your non-married status - read the first line at the top of the commentary!
David
Edited by sumo69 on Monday 4th February 13:33
sumo69 said:
I was intending to post back on this thread earlier but didn't see that the OP had replied to my initial query.
As others have alluded, the basic fact is for tax purposes you are strangers in which case any transfer of ownership would be deemed by HMRC to be at "open market value" and not at a "no gain/loss value" which it is for inter-spouse transfers.
So you would be in a position that Capital Gains Tax would be paid on any "gain" albeit you are not in receipt of any funds.
Additionally, the transfer is a PET for IHT purposes and would become chargeable if you died within 7 years.
Form 17 doesn't effect the liability arising on you because of your non-married status - read the first line at the top of the commentary!
David, thanks for the reply. Does the GCT liability you allude to above arise in instances of change of beneficial, rather than legal, ownership?As others have alluded, the basic fact is for tax purposes you are strangers in which case any transfer of ownership would be deemed by HMRC to be at "open market value" and not at a "no gain/loss value" which it is for inter-spouse transfers.
So you would be in a position that Capital Gains Tax would be paid on any "gain" albeit you are not in receipt of any funds.
Additionally, the transfer is a PET for IHT purposes and would become chargeable if you died within 7 years.
Form 17 doesn't effect the liability arising on you because of your non-married status - read the first line at the top of the commentary!
Notwithstanding the first few lines on the top of form17, if I were to create a declaration of trust to transfer 100% of the beneficial ownership to someone else, could I then use form 17 to declare this fact to HMRC?
Do you want your dad to incur a Capital Gains Tax liability?
Is he cuerrently declaring the income being generated by the rent - and paying the tax arising?
Is he using the funds being generated to help pay for his care home costs?
Is he a basic rate taxpayer?
Are YOU a basic rate taxpayer?
What about Inheritance Tax?
Is he cuerrently declaring the income being generated by the rent - and paying the tax arising?
Is he using the funds being generated to help pay for his care home costs?
Is he a basic rate taxpayer?
Are YOU a basic rate taxpayer?
What about Inheritance Tax?
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