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HMRC internal manual

Trusts, Settlements and Estates Manual

Ownership and income tax: Specific types of property: shares: example 1: sole name - valid declaration of trust

A holds 500 shares in company X in his own name. A does not return the dividends for income tax purposes - instead his wife B returns them.

ITA/S836 is not in point, as the property is not held in joint names (TSEM9814).

You need to consider what evidence there is that the beneficial ownership of the shares differs from the legal ownership. The fact that B returned the income is not in itself evidence of a beneficial interest.

A submits a declaration of trust dated 01/06/10. In it A states ’I hold the 500 shares in company X on bare trust for my wife B’.

Where the settlor makes a declaration that he or she holds the shares on trust, the transfer is effective at that date. [Milroy v Lord (1862) 4 De G.F. & G. 264: ER 45 Ch 1185]

Any income from the shares after 01/06/10 is taxable on B. The position with regard to any other shareholdings depends on whether A has executed any further declarations in writing in respect of those shareholdings.