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HMRC internal manual

Trusts, Settlements and Estates Manual

From
HM Revenue & Customs
Updated
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Ownership and income tax: legal background: ownership: legal and beneficial ownership - separation

Clear indication by name

In some cases it will be made clear that the legal owner is not the beneficial owner.

The simplest example is where property is held by ‘A as trustee for B’. A is the legal owner (trustee), B is the beneficial owner. A trust in these terms is a bare trust. Or property may be held in the name of ‘A as nominee for B’. ‘Nominee’ is a bare trustee. Again, A is the legal owner, and B is the beneficial owner.

Declaration of trust

The legal and beneficial ownership of property may be separated by a valid declaration of trust.

Examples

  1. Property is said to be held in B’s name for A. If there is a valid declaration (TSEM9520) showing that B purchases the property in B’s name for and on behalf of A, and so long as there are no other conditions, A is the beneficial owner of the property. B would be the legal owner, and a nominee or bare trustee, holding the property on trust for A.

  2. A decides to transfer beneficial ownership of property A has purchased to B while still holding it in A’s own name. If there is a valid declaration (TSEM9520) showing that A has in fact assigned beneficial ownership of the property to B, then A is the legal owner and B is the beneficial owner.