Declaration of Trust

[audi321]

Hi, does anyone have any knowledge of Declaration of Trusts in relation to property income?

With the crazy tax situation around personally owned BTLs (and the 2% extra tax coming in April) I'm looking into it.

I know I will speak with a solicitor eventually, but if I'm not going to get what I want from it, then it would be a waste of time/money in meeting one until I know a bit more.

Questions are:

1. Does a DoT mean I can divert income to a non earner (i.e. children etc)
2. If 1. is Yes, then can it be varied throughout the years? (i.e. when they start earning themselves, reduce it back)? Or even cancelled completely?
3. If there is a mortgage on the property, will the mortgage company frown on this? Will they ever know if I didn't tell them?
4. Who actually knows I've made one? Do I tell the HMRC and/or Land Registry?

Thanks all for any advice.

[Nicetobenice]

You would need to double check the tax treatment if diverting to a child as I am pretty certain they would get taxed at your rate anyway.

[audi321]

Nicetobenice said:

You would need to double check the tax treatment if diverting to a child as I am pretty certain they would get taxed at your rate anyway.

Really?? What makes you say that?

[Nicetobenice]

audi321 said:

Nicetobenice said:

You would need to double check the tax treatment if diverting to a child as I am pretty certain they would get taxed at your rate anyway.

Really?? What makes you say that?

As that's the rule for diverting income.
I think the maximum is £100 a year

Edited to clarify that you need to check the treatment for rental income as I am not sure how the rules differ for that class of income.

[Kwackersaki]

audi321 said:

Hi, does anyone have any knowledge of Declaration of Trusts in relation to property income?

With the crazy tax situation around personally owned BTLs (and the 2% extra tax coming in April) I'm looking into it.

I know I will speak with a solicitor eventually, but if I'm not going to get what I want from it, then it would be a waste of time/money in meeting one until I know a bit more.

Questions are:

1. Does a DoT mean I can divert income to a non earner (i.e. children etc)
2. If 1. is Yes, then can it be varied throughout the years? (i.e. when they start earning themselves, reduce it back)? Or even cancelled completely?
3. If there is a mortgage on the property, will the mortgage company frown on this? Will they ever know if I didn't tell them?
4. Who actually knows I've made one? Do I tell the HMRC and/or Land Registry?

Thanks all for any advice.

Not sure about children but I made a DOT on a property and diverted the income to my wife several years ago as she was in the lower tax bracket.

All we had to do was make a statement to the HMRC and you don’t have to notify the Land Registry. The property is un mortgaged though so don't know if it would make a difference or you’re required to inform the lender if it is?

She is currently about to take some time out so her only income will be from the property and a Google suggests that if the income is over £1000 a year, she will still have to fill out a self assessment but if the rental income is below her personal allowance, then there is no tax to pay.

A good accountant should be able to advise. When we discussed it with our usual solicitor, he hadn’t a clue and got a bit sniffy when I said I’d send him some Google links!

https://taxlandlord.com/tax-saving-trust-declarati...

[bennno]

audi321 said:

Hi, does anyone have any knowledge of Declaration of Trusts in relation to property income?

With the crazy tax situation around personally owned BTLs (and the 2% extra tax coming in April) I'm looking into it.

I know I will speak with a solicitor eventually, but if I'm not going to get what I want from it, then it would be a waste of time/money in meeting one until I know a bit more.

Questions are:

1. Does a DoT mean I can divert income to a non earner (i.e. children etc)
2. If 1. is Yes, then can it be varied throughout the years? (i.e. when they start earning themselves, reduce it back)? Or even cancelled completely?
3. If there is a mortgage on the property, will the mortgage company frown on this? Will they ever know if I didn't tell them?
4. Who actually knows I've made one? Do I tell the HMRC and/or Land Registry?

Thanks all for any advice.

No chance, if you could then everybody would be doing it.

To enable this the DoT would effectively need to transfer the property/properties in to the children’s names, which you won’t be able to do with a mortgage in place.

A potential option would be to put the properties in a company name and have the children paid by the company, but again mortgage would need to be changed, property owmership transfered, stamp duty paid etc….