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HMRC internal manual

Trusts, Settlements and Estates Manual

Ownership and income tax: Specific types of property: shares: example 3: sole name - Settlements legislation

A and B are a married couple. A is a higher rate taxpayer, and B has no taxable income.

A purchased 100 shares in company Y plc in her sole name. A does not return the dividends, and says that she has transferred the right to all the income to B.

The 50/50 rule (TSEM9814) does not apply, because the shares are not held in joint names.

There is a valid deed of assignment showing that A has transferred the beneficial interest in the income to B, but the Settlements legislation applies to deem the dividends 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 spouse (TSEM4200). The dividends are taxable on A.