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HMRC internal manual

Capital Gains Manual

Bare trusts: examples: land owned by several people at once

TCGA92/S60 may apply also to two or more persons who are `jointly’ absolutely entitled, provided that their interests are absolute and concurrent. A familiar example before 1997 was the case of common or joint ownership of land in England or Wales where trustees held the legal title upon `trust for sale’ for the joint tenants or tenants in common (see Kidson v Macdonald, 49TC503). In England and Wales from 1997 almost all absolute and concurrent interests in land will be held under a ‘trust of land’ following the Trusts of Land and Appointment of Trustees Act 1996. 

The distinction between tenancy in common and joint tenancy is discussed at CG70500+. Section 34 Law of Property Act 1925 provides that in England and Wales tenancies in common and joint tenancies can only exist as equitable interests (in other words as interests under a trust). The legal title to the land must be held by trustees, even in the simple case of the home owned by two persons living together. These trustees are bare trustees. This is not the case in Ireland, where tenancies in common and joint tenancies may exist as legal interests. The equivalent Scottish interests may also exist without the use of a trust.

The expression `trust for sale’ may cause confusion. A trust for sale is a trust under which the trustees have the duty to sell the land, although normally the deed or will gives them the power to postpone sale, and indeed the power may be expressly restricted. A ‘trust of land’ is, with a few exceptions, any trust of property which consists of or includes land. But it is not the case that there is settled property if property is on trust for sale or a trust of land. Property held on trust for sale or a trust of land may for CGT purposes be settled property or property to which the beneficiaries are absolutely entitled, depending upon the nature of the interests of the beneficiaries.

Another example of joint absolute entitlement is the case where property has ceased to be settled property but has not been appropriated or distributed to the persons having interests in it, see CG37100+.