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Where Taxpayers and Advisers Meet

CGT, declaration of trust or change deeds?

bhartiya
Posts:6
Joined:Wed Aug 06, 2008 3:51 pm
CGT, declaration of trust or change deeds?

Postby bhartiya » Tue Mar 11, 2014 3:36 pm

Hello

I purchased a house jointly with my wife back in Nov1999 & was our main residence until Aug 2007. We move to a new house in Aug 2007 and since then this house has been let-out. To financial year 2012-13, both my wife & I shared the net rental income on 50-50 basis, however would like to change the arrangement to something like 90-10 basis

Having reviewed the comments on other topics inorder to achieve above, I need to submit a Declaration of Trust & Form 17 to inland revenue. Is this correct?

More so, if the declaration of trust & Form 17 are signed off say on 11th mar 2014, then when it comes to filling in the tax return for year 2013-14, can we claim split the rental income based on 90-10 ratio or does the new ratio comes in effect for any income generated post 11th mar 2014?

thanks for your help

section 44
Posts:4468
Joined:Thu Oct 30, 2008 12:47 pm

Re: CGT, declaration of trust or change deeds?

Postby section 44 » Wed Mar 12, 2014 11:16 am

Having reviewed the comments on other topics inorder to achieve above, I need to submit a Declaration of Trust & Form 17 to inland revenue. Is this correct?
yes
the new ratio comes in effect for any income generated post 11th mar 2014?
correct

bhartiya
Posts:6
Joined:Wed Aug 06, 2008 3:51 pm

Re: CGT, declaration of trust or change deeds?

Postby bhartiya » Thu Mar 13, 2014 12:15 am

Thanks section 44

One last question,
say in Apr 2015 if we were to dispose this property off, then what will be the impact from CGT perspective? We bought the place for £150k and assuming it will be valued say approx £350k then would be possible to get visibility on CGT both for myself & my spouse. I am a high rate tax payer, whilst my spouse is a basic rate tax payer. I believe, PRR & LR will apply only once, but both my wife and I can use our full CGT allowance- this is where I am not too sure. Your help with detailed calculations will be greatly appreciated

section 44
Posts:4468
Joined:Thu Oct 30, 2008 12:47 pm

Re: CGT, declaration of trust or change deeds?

Postby section 44 » Thu Mar 13, 2014 10:10 am

the proceeds of sale would also be shared 90:10

bhartiya
Posts:6
Joined:Wed Aug 06, 2008 3:51 pm

Re: CGT, declaration of trust or change deeds?

Postby bhartiya » Sat Mar 15, 2014 11:58 pm

thanks

are there any issues foreseen if I declare the ratio as 90:10 and in couple of years time I change it back to say 60:40?

King_Maker
Posts:6538
Joined:Wed Aug 06, 2008 3:22 pm

Re: CGT, declaration of trust or change deeds?

Postby King_Maker » Mon Mar 17, 2014 11:37 am

Have you read HMRC's Help Sheet HS283 on the subject?

http://www.hmrc.gov.uk/helpsheets/hs283.pdf

Peter D
Posts:10668
Joined:Wed Aug 06, 2008 3:37 pm

Re: CGT, declaration of trust or change deeds?

Postby Peter D » Mon Mar 17, 2014 12:03 pm

The 90% share holder would have a CGT bill of circa £3,800. Regards Peter

AvocadoK
Posts:1232
Joined:Wed Aug 06, 2008 3:46 pm
Location:Lancashire

Re: CGT, declaration of trust or change deeds?

Postby AvocadoK » Mon Mar 17, 2014 6:14 pm

Peter, looks like you missed the bit that says they are husband and wife!
AK

bhartiya
Posts:6
Joined:Wed Aug 06, 2008 3:51 pm

Re: CGT, declaration of trust or change deeds?

Postby bhartiya » Wed Mar 19, 2014 10:56 pm

thanks to all for your valuable input

I require your guidance on the implications if any for the below mentioned scenario

1.Current ownership ratio on this property is 50:50 between my self and my wife

2.wef 06 apr 2014, we submit the declaration of trust & Form 17 and change the ownership ration to10:90 between myself and my wife

3. couple of years down the line we would like to change the ownership ratio back to 25:75 between my self and my wife( ie re-submit a revised declaration of trust & Form 17)

Is there any issue foreseen with step 3 above?


Many thanks once again

bd6759
Posts:3544
Joined:Sat Feb 01, 2014 3:26 pm

Re: CGT, declaration of trust or change deeds?

Postby bd6759 » Thu Mar 20, 2014 1:02 am

Is there any issue foreseen with step 3 above?
Yes. Very much so. If you know you are getting some of it back, you haven't gifted it in the first place.


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