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HMRC internal manual

Capital Gains Manual

Bare trusts: constructive trusts

In certain situations the law may regard the legal owner of property as in some way bound to deal with it as if he or she were a trustee. If so, it is almost certainly a bare trust.

A special type of case is where a person has a right of occupation which the courts will protect. The owner may be treated as holding the property as constructive trustee for the occupier. Generally the occupier’s right is limited to his or her life, and therefore, if this is a constructive trust, this is settled property for CGT purposes. In practice this argument is often put forward by a taxpayer in order to obtain relief under TCGA92/S225. The issues are discussed at CG65415+.