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HMRC internal manual

Trusts, Settlements and Estates Manual

Ownership and income tax: Specific types of property: land and buildings: example 6: sole name - no resulting trust

A has held a flat in his sole name for years. It is rented out. A claims that his new wife B, a non-taxpayer, is the beneficial owner of the flat and is consequently taxable on all the rental income, using up personal allowances etc. A says that because B has paid some repair bills on the flat and has redecorated it, there is a resulting trust to B and she is the beneficial owner of the property, and should be taxable on the income.

However, to establish a resulting trust there must be a direct contribution to the purchase of the property. There is no evidence that B contributed to the purchase of the flat - in fact A did not even know her at the time of the purchase. Paying bills and redecorating do not constitute direct contributions to the purchase price of land and buildings (TSEM9640).

Consequently, A remains beneficial owner of the flat and the income, and is taxable on all the rent.