Optimise Accountants -

Putting Properties into a Trust

February 3, 2016

Are you concerned about the budget announcement?

Are you looking for a solution to minimise tax?

Do you hear many different views on how to use trusts?

The problem – property investors are being targeted by George Osborne

The budget announcement is going to have a major bearing on how you set up your property structure. I provided property investors with a spreadsheet about the budget announcement so that they could see how it affects them. Ultimately there are going to be a lot of people who will be worse off.

There has been a deeper interest in trusts because it has been publicised that you can:

  • Move properties into trust without Capital Gains Tax (CGT)
  • Move properties into trust without Stamp Duty Land Tax (SDLT)
  • Not pay any tax on the income

So, would you invest in properties without paying tax? Would you prefer to undertake a trust strategy to help you make more money from property? Who wouldn’t?

If you have answered yes to these questions then this article will be an interesting read.

What is a trust and how can it be used?

There are three types of people who are involved in trusts:

  • settlor (current property owner)
  • trustees (who will hold the property in their name for the benefit of the beneficiaries)
  • beneficiaries (individuals or companies)

A trust may be done in writing via a declaration. There are various components of such a document:

  • words (intention to create a trust)
  • subject (the property and beneficial interest/s in the property)
  • object (the person/s having the beneficial interest/s)

The donor/trustee does not need to register the trust with the Land Registry, nor does the document require delivery or a witness to signatures.

A bare trust from HMRC’s perspective means that the beneficiary has absolute entitlement to the income and capital of the property.

Examples of a trust declaration

Here are some examples from HMRC’s website of how a trust may be written:

“I John Smith declare that I hold the property described as XXXXX for my son David Smith absolutely”

or

“I John Smith declare that I hold the property described as XXXXX on trust for my son David Smith”

A Beneficial Income Company Trust (BICT)

Any income put into a company via a trust will be subject to corporation tax, thus a great tax saving if you are a higher rate taxpayer.

Next steps

If you want to understand how to implement this strategy or to discuss other finance/tax questions then please book some time with us using the below calendar:

If you are looking for a new accountant then please book some time with us using the below calendar. Please note that this booking is to describe our services and will not be used to discuss your personal tax affairs.



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Telephone: 0115 939 4606
Email: simon@optimiseaccountants.co.uk