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HMRC internal manual

Trusts, Settlements and Estates Manual

Ownership and income tax: Specific types of property: land and buildings: example 8: sole name - Settlements legislation

A and B are civil partners. A is a higher rate taxpayer, and B has no taxable income.

A purchased a house in his sole name. It is rented out. A does not return the rents, and says that he has transferred the right to all the rents to B.

ITA/S836 does not apply, because the property is not in joint names (TSEM9814).

Even if there is a valid declaration showing that A has effectively transferred the beneficial interest in the income to B, the Settlements legislation applies to deem the rents to belong to A. A has ‘retained an interest’ if the property or income may be applied for the benefit of A or A’s civil partner (TSEM4200). The exception for outright gifts to spouses or civil partners does not apply because only the right to income has been transferred - not the underlying property (see TSEM4205).