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HMRC internal manual

Capital Gains Manual

Private residence relief: settled property: express trusts


An express trust will be created when there is clear intention by the settlor to create a trust. That requires the settlor to make it clear that property he or she owns is to be held by trustees for the benefit of a beneficiary or beneficiaries. A valid express trust requires that three certainties are met:

  • Certainty of intention to create a trust;
  • Certainty as to who is to benefit from the trust; and
  • Certainty as to the subject matter of the trust including the extent of the beneficiaries’ interest in the trust property.

Formalities required to create an express trust of land

Section 53(1)(b) Law of Property Act 1925 requires that:

A declaration of trust respecting any land or any interest therein must be manifested and proved by some writing signed by some person who is able to declare such trust or by his will.

The section requires only that the trust must be evidenced in writing. There is no requirement that the trust is created in writing. In many cases there is a deed but the formalities of section 53(1)(b) will be met by a letter or other document signed by the settlor. The letter or document must satisfy the three certainties listed above. The evidence in writing does not have to date from the time the trust was created. Written evidence can be dated any time before the property is sold.

Section 53(1)(b) applies only to express trusts. Section 53(2) Law of Property Act 1925 provides that:

This section does not affect the creation or operation of resulting, implied or constructive trusts.

If there is no evidence in writing of a trust the person disposing of the property might claim they held the property as trustees of an implied trust. See CG65415+.