Declaration of trust with wife to reduce tax liability?

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    #31
    Where does it mention sole name? I'm reading you must be registered tenants in common.

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      #32
      Originally posted by Gordon999 View Post
      According to information posted on the SAM Conveyancing website, the DOT would be required to property held in "joint names".

      For property held under "sole name", a deed of assignment is required to assign % interest to spouse. The legal ownership remains unchanged and does not require consent from the mortgage lender.

      https://www.samconveyancing.co.uk/ne...-property-8197
      Thanks for posting. I've spoken to them on the phone and their 'deed of assignment' is pretty much the same as a declaration of trust.

      Funnily enough i've read this page before but missed the mortgage lender bit. You are right, it states it right there in black and white (or purple and white?)...

      The assignment of equitable interest doesn't change the legal title and as such may be preferable if the owners can't or would prefer not to change the legal title. A transfer of equity would change the legal title and, if there is a mortgage, require the mortgage lender's consent which, depending on the individual circumstance, might be withheld. With assignments of beneficial interests, the legal title does not change and as such there is no legal requirement to consult the mortgage lender.

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        #33
        Originally posted by Kape65 View Post
        Where does it mention sole name? I'm reading you must be registered tenants in common.
        It is assumed in the first line...

        "A deed of assignment, in relation to property, is used to assign an equitable interest in land to another party."

        There are no title changes so it can be anyone

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          #34
          If a person owns a property in his sole name he can assign any proportion of his beneficial interest to whomever and as many people as he likes up to 100%.

          If two or more persons own a property as tenants-in-common each can assign any proportion of his beneficial interest to whomever and as many people as he likes up to 100% of his share.

          If two or more persons own a property as joint tenants each can assign any proportion of his beneficial interest to whomever and as many people as he likes up to 100% of his interest. Despite the fact that he does not strictly have a share he is deemed to have one which will be a half if there are two owners, a third if there are three, a quarter if there are four and so on. The site mentioned above says you need to sever the joint tenancy first, but that is not the case as an assignment operates to sever the joint tenancy. However, where there are more than two joint tenants the severance only takes effect between the new owner and the two existing owners taken together, So, if A, B and C own property as joint tenants and A assigns all his interest to D, then as between D on the one hand and B and C on the other, there is a tenancy in-common with D having a third and B and C having two-thirds held as joint tenants. So, if C dies the property is then held as to a third for D and two-thirds for B.

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            #35
            The cause of confusion is that there is both property law and then there are HMRC's processes and rules.

            If you want to use a simple deed of trust and notify HMRC using form 17, it doesn't really matter what the legal position about assigning beneficial interest is, HMRC require that the deed is made between a married couple as tenants in common.

            If there is another arrangement to vary the beneficial ownership - which is still likely to be a trust of some kind - you can't use Form 17 and HMRC will use a different process. They have a special division that reviews, registers and handles more complex trusts.

            So, taking Lawcruncher 's first and third example, while it's possible for beneficial ownership to be transferred when the ownership is sole or a joint tenancy, the change can't be notified to HMRC using form 17 and is likely to result in more complex tax admin for the people involved.
            When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
            Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

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              #36
              Originally posted by jpkeates View Post

              So, taking Lawcruncher 's first and third example, while it's possible for beneficial ownership to be transferred when the ownership is sole or a joint tenancy, the change can't be notified to HMRC using form 17 and is likely to result in more complex tax admin for the people involved.
              That's where the deed of assignment comes in which states each person's share. Is that what you mean by the complex admin?

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                #37
                I've realised i've been using the terms 'declaration of trust' and 'deed of assignment' interchangeably.

                It seems there may be a slight difference. What I am actually trying to do is via a Deed of Assignment.

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                  #38
                  Originally posted by Madmax86 View Post
                  That's where the deed of assignment comes in which states each person's share. Is that what you mean by the complex admin?
                  There's a well established process for a simple deed of trust between a married couple who are tenants in common.
                  Both spouses sign a standard form and then just submit tax returns on the basis stated.

                  For less standard arrangements HMRC may have additional requirements.
                  Our family trust has to submit a separate tax return annually, even though there is no trading activity, for example.
                  When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                  Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                  Comment


                    #39
                    Its becoming very confusing for lay persons to discuss this subject. Tax returns are a private and confidential matter between the tax payer and tax office.

                    Its far better for you to take the advice from a solicitor firm which is expert on drafting DOT and DOA for tax situations.

                    Comment


                      #40
                      Originally posted by Gordon999 View Post
                      Its far better for you to take the advice from a solicitor firm which is expert on drafting DOT and DOA for tax situations.
                      I agree.

                      Truth is, most solicitor firms don't have a clue about tax matters.

                      Sam conveyancing seems to be the only company I've found online that specialises in DOTs and DOAs and is able to speak about the process confidently. Or even Parachute law, which seems to be their sister company maybe.

                      Any other solicitor firm i've spoken to has had mixed responses.

                      Comment


                        #41
                        Try looking for a firm with a specialist in family law (which, counter intuitively, perhaps) is where this kind of stuff normally sits.

                        One of the problems with tax is that it isn't a science, it's more of an art, and people understand and do things differently.
                        I'm personally quite risk averse about tax, while other people regard it as something they can try and win.
                        When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                        Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                        Comment


                          #42
                          Originally posted by Madmax86 View Post
                          Sam conveyancing seems to be the only company I've found online that specialises in DOTs and DOAs and is able to speak about the process confidently.
                          They do though have at least one error on the page you posted - admittedly a conveyancing one rather than a tax one.

                          Comment


                            #43
                            Originally posted by jpkeates View Post
                            Try looking for a firm with a specialist in family law (which, counter intuitively, perhaps) is where this kind of stuff normally sits.
                            "Family law" covers matters such as divorce. separation, child custody, adoption and the like. Tax planning these days usually comes under the heading "private client".

                            As to whether you should engage a solicitor or accountant the following webpage gives a balanced view: https://www.taxinsider.co.uk/account...ions-decisions

                            Comment


                              #44
                              We're an old fashioned lot here in the West Midlands.
                              When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                              Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                              Comment


                                #45
                                Madmax86,

                                Solicitor firms are regulated under the Money Laundering Act by the UK Law Society , which does not allow its members to offer tax advice .

                                I suppose selling DOTs and DOAs to reduce tax payment is not the same business as offering tax advice.

                                Mortgage lenders offering loans to property buyers, take the property title as security for the loan and register a charge over the property title held at Land Registry, to prevent selling of the property without paying off the loan. So mortgage lenders are securing the property at the legal ownership level.

                                The Tax Office recognises the concept of beneficial ownership and requires the beneficial owner to submit tax return and pay tax on the income.

                                So I believe the mortgage lender does not need to be informed about DOTs and DOAs.

                                Comment

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