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Where Taxpayers and Advisers Meet

Changing Beneficial Ownership - Deed of Trust Update

Martintaxes
Posts:38
Joined:Fri Apr 28, 2017 12:25 pm
Changing Beneficial Ownership - Deed of Trust Update

Postby Martintaxes » Mon May 08, 2023 11:29 am

Hi TaxationWeb,

My wife and myself wish to change the beneficial ownership of a BTL property. It was set up by Deed of Trust/Form 17 a few years ago now, with my wife as 99% beneficial owner and myself 1%.
Our tax situation has now changed and we intend to sell the house in a few years' time, so we would like to change this to 50%/50%, and to use my tax allowance, as I am no longer employed. Do we need to get a new Deed of Trust drawn up and send this to HMRC with a new Form 17 please?

Many thanks,
Martin.

billypiper
Posts:114
Joined:Wed Aug 06, 2008 4:10 pm

Re: Changing Beneficial Ownership - Deed of Trust Update

Postby billypiper » Mon May 08, 2023 2:24 pm

Basic yes

Dennis
Taxesclear 07802704840

Martintaxes
Posts:38
Joined:Fri Apr 28, 2017 12:25 pm

Re: Changing Beneficial Ownership - Deed of Trust Update

Postby Martintaxes » Mon May 08, 2023 2:42 pm

Thank you.

someone
Posts:699
Joined:Mon Feb 13, 2017 10:09 am

Re: Changing Beneficial Ownership - Deed of Trust Update

Postby someone » Mon May 08, 2023 3:30 pm

Technically you don't need to do a new form 17 - or let HMRC know. The act of changing the proportions will invalidate the previous form 17 which will then mean you fall back to the default 50/50 in the absence of a Form 17 election.

I'm not sure, in law, whether you can make a form 17 election for 50/50 - but it won't hurt anything if you try and will let HMRC know that the proportions have changed and save the hassle if they notice and query the change when you come to do a tax return.

Martintaxes
Posts:38
Joined:Fri Apr 28, 2017 12:25 pm

Re: Changing Beneficial Ownership - Deed of Trust Update

Postby Martintaxes » Mon May 22, 2023 3:01 pm

Hi, thanks for the response Someone.

The Deed of Trust though will still be valid for 99/1%, which accompanied the Form 17. How would that work?
Thanks,
Martin.

maths
Posts:8513
Joined:Wed Aug 06, 2008 3:25 pm

Re: Changing Beneficial Ownership - Deed of Trust Update

Postby maths » Mon May 22, 2023 5:52 pm

The split set out in the Declaration continues to operate until, for example, the beneficial interest of either spouse in either the property or the income it produces changes. The execution of a new Declaration altering the % split set out in the earlier Declaration causes the earlier Declaration to cease to operate and the new Declaration is then in force.

There is no need to file a new Form 17 re the new Declaration if under the Declaration the split is to be 50/50. This 50/50 split will operate automatically even if no new Form 17 is filed.

Martintaxes
Posts:38
Joined:Fri Apr 28, 2017 12:25 pm

Re: Changing Beneficial Ownership - Deed of Trust Update

Postby Martintaxes » Tue May 23, 2023 8:00 am

Thanks Maths, very clear.

Regarding our Tenants in Common situation, do I need to inform Land Registry about the change? I wondered if it would necessitate a stamp duty land tax form to be completed?
As we intend to sell the house in the coming years, I want to be sure that the unequal shares wont crop up as a problem here for e.g. CGT allowances.
Many thanks,
Martin.

someone
Posts:699
Joined:Mon Feb 13, 2017 10:09 am

Re: Changing Beneficial Ownership - Deed of Trust Update

Postby someone » Tue May 23, 2023 8:02 am

Hi, thanks for the response Someone.

The Deed of Trust though will still be valid for 99/1%, which accompanied the Form 17. How would that work?
Thanks,
Martin.
I realize I was a bit ambiguous.

The original DoT and Form 17 will apply up until the date that a new deed is executed with new proportions. At that point the income will be split (for tax purposes) by the default 50/50 regardless of the new proportions unless/until a new form 17 is submitted.

someone
Posts:699
Joined:Mon Feb 13, 2017 10:09 am

Re: Changing Beneficial Ownership - Deed of Trust Update

Postby someone » Tue May 23, 2023 8:13 am

Thanks Maths, very clear.

Regarding our Tenants in Common situation, do I need to inform Land Registry about the change? I wondered if it would necessitate a stamp duty land tax form to be completed?
As we intend to sell the house in the coming years, I want to be sure that the unequal shares wont crop up as a problem here for e.g. CGT allowances.
Many thanks,
Martin.
I don't know if you need to tell HMLR. Note that if you don't, the new deed will still have effect and will apply for tax purposes, but you might be in violation of some other law regarding telling HMLR. Once upon a time you definitely didn't need to tell HMLR but with all the changes regarding transparency of beneficial ownership via trusts that might have changed.

Assuming you're both the only legal owners and the only beneficial owners then you do not need to register the trust with HMRC, it's a schedule 3a excluded trust.
https://www.legislation.gov.uk/uksi/2017/692/schedule/3A
ss9

You don't need to do a SDLT return (assuming no consideration)
https://www.gov.uk/guidance/stamp-duty-land-tax-transactions-that-dont-need-a-return

someone
Posts:699
Joined:Mon Feb 13, 2017 10:09 am

Re: Changing Beneficial Ownership - Deed of Trust Update

Postby someone » Tue May 23, 2023 8:17 am

FWIW, this is what chatGPT said:
Do I need to tell HMLR if we change the beneficial ownership proportions of a residential property

ChatGPT
I assume you are referring to HMLR as the HM Land Registry, which is responsible for maintaining the land register in England and Wales. While I can provide general information, it's important to note that specific legal requirements may vary, and it is always advisable to consult a legal professional or contact the HM Land Registry directly for accurate and up-to-date advice.

Typically, any changes in the beneficial ownership proportions of a residential property should be registered with the HM Land Registry. This includes situations where there is a change in the share of ownership between multiple owners or if a property is being transferred to different individuals. The registration process ensures that the Land Registry's records accurately reflect the current ownership arrangements.

By updating the beneficial ownership information, you can protect your legal interests and establish a clear record of who owns what share of the property. This can be important in various situations, such as selling the property or resolving any disputes that may arise among the owners.

It's worth noting that the precise steps and requirements for updating the beneficial ownership proportions may depend on the specific circumstances, such as whether the property is held as joint tenants or tenants in common, whether there is a mortgage on the property, and other factors. Therefore, it is recommended to consult a legal professional who can guide you through the process and ensure compliance with the relevant laws and regulations.
It says "should" not "must". Read what you want into that...


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