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HMRC internal manual

Trusts, Settlements and Estates Manual

HM Revenue & Customs
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Ownership and income tax: Specific types of property: land and buildings: example 3: sole name - Settlements legislation

A house is held in the sole name of A, and the Land Registry documents confirm this. The house is rented out and the rents are paid to A. A claims that all the rent is taxable on his wife B.

A produces a ‘trust deed’. A claims the ‘trust deed’ transfers the right to income to his wife. But even if the trust deed does validly transfer the right to all of the income from A to B, that would constitute a settlement of the right to income, because A would still retain an interest in the property itself. Consequently the settlement would be caught by ITTOIA/S624 and all the income would remain taxable on A (TSEM4200).

Joint ownership is not in point here. The property is not held ‘in joint names’, so ITA/S836 (TSEM9814) is not relevant. That section refers to ‘property held in the names of a husband and wife etc’.