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Disposal of Property owned by trust

Trust and Capital Gains Tax

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Hi

A trust owns a property which is occupied by the trustee or beneficiary throughout the period of ownership. When the property is sold, will it be liable for CGT?  Will they be able to claim the PPR thoughout the period of ownership?

 

 

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By Hugo Fair
23rd Jul 2021 18:47

Take a read of https://www.gov.uk/government/publications/private-residence-relief-hs28... ... and pick out the bits pertinent to your situation (which is isn't entirely clear as posted).

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Replying to Hugo Fair:
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By Justin Bryant
02nd Aug 2021 13:20

Interesting this bit:

"10. How to claim relief
In your computation of the gain on any relevant disposal included with the Capital Gains Tax summary pages CG 1 to CG 4, either in box 54 on page CG 3 or in your attached computation, write that ‘Private Residence Relief is claimed’ and state the amount of relief claimed. In addition enter code PRR (where lettings relief does not apply) or LET (where lettings relief does apply) in box 8."

PPR is actually automatic (if it applies) and therefore needs no claim.

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Replying to Justin Bryant:
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By Hugo Fair
02nd Aug 2021 16:48

I'm not a legal beagle, but I guess it depends on what is meant by "claimed".
Unfortunately it seems to be used within guidance:
*either* where it really means 'requested' (which is how I presume you've taken it);
*or* where it really means 'notified' (which is how I read the instruction for form completion).
Does that make sense - or am I missing your point?

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Replying to Hugo Fair:
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By Justin Bryant
02nd Aug 2021 17:35

My simple point is that no claim is needed for PPR, as it's an automatic relief (assuming the relevant PPR conditions apply). That said, there's of course no harm "claiming" it.

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Replying to Justin Bryant:
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By Tax Dragon
02nd Aug 2021 17:57

That section 10 is linked to section 8. You probably wouldn't know that unless you followed the link from section 8 to get there (of course for trustees it is a claim).

I have to agree the layout is unhelpful. Some helpsheets are pretty good. HS283 isn't one of the better ones, tbh - and not just because of the 'claim' issue.

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Replying to Tax Dragon:
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By Justin Bryant
03rd Aug 2021 09:14

Yes; that's right. Only trustees have to claim PPR.

But also, on the old NRCGT return there was a PPR question where HMRC clearly required you to claim it in practice at least.

I think the position is that the trustee can make the election after the sale of the property. The PPR is then determined by looking at each year of ownership and whether a beneficiary used it as a residence. For NR Bs they need to spend 90 days or more in it; for UK resident Bs you apply the normal test of fact to determine whether it is a main residence and a joint election should normally be made in these cases, for NR Bs using the overseas property they normally own as the other residence (and nominating the one held in the trust within the 2 year window* - although the B could rent and live in another property as their other main residence to reset the 2 year clock if necessary).

*The trustee will be the one making the CGT disposal 30 day return which may provide the option of making the nomination at that stage. Indeed, it is interesting that the old NRCGT return effectively allows a (joint) retrospective PPR main residence election to be made that dispenses with the normal 2 year election period for both UK resident and non-UK resident Bs. I assume that's also the case with the 30 day CGT return.

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By Tax Dragon
23rd Jul 2021 20:19

So... just guessing... there's some residential property already owned (possibly having been converted from a commercial building, such as a pub).

You think that if a residential property gets put into a trust, someone [maybe a trustee or beneficiary] lives there for a bit, then the property can be sold tax free and all the tax issues go away?

Hmm.

To borrow and amend a phrase from a wiser, older, contributor than me, Les Howard (you may have heard of him?)... too much wrong with your analysis for a forum post.

Really and truly, you should have paid for advice 4, 5, 6 years ago.

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Replying to Tax Dragon:
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By Tax Dragon
23rd Jul 2021 20:23

(I don't think I've ever seen the word "analysis" used so inappropriately.)

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Replying to Tax Dragon:
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By Cylhia66
24th Jul 2021 08:10

Tax Dragon. This is where TCGA92/S225A comes handy, no?

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Replying to Cylhia66:
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By Tax Dragon
24th Jul 2021 08:59

It's handy to know s225A exists, obviously. But if you have a property (and let's ignore possible income tax/transactions in land issues that might be relevant in the OP's [guessed at, but look at all the OP's other questions to see why I make those guesses] situation, let's ignore... well, it's quite a list, but let's ignore everything apart from CGT and trusts... let's even ignore IHT, though obviously you can't really ignore IHT). You have a property. It's laden with gain. You want to sell CGT free. You know about s225A. Does it help you at all? I'll let you create whatever type of trust you want, to make use of it.

Now of course in other situations, s225A can help. But one clue in the OP itself (even ignoring the previous threads) that "this" is not a situation "where TCGA92/S225A comes handy" is the mention in the OP of "trustee or beneficiary". The poster of such a comment is not talking about something that has happened, but toying with ideas about what they might do.

As Maddy Christopher says (https://www.accountingweb.co.uk/any-answers/tax-on-share-transfer-gift-b...), "We'd like to remind users that Any Answers is not a place to disrespectfully scrounge free advice from accountants."

I'd say the lack of response by the OP on any of the threads counted as disrespectful.

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Replying to Cylhia66:
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By Tax Dragon
02nd Aug 2021 07:11

It's been a week.

More than.

Quite a bit more than.

OP hasn't been back to put me straight.

Kind of suggests that my guesses were right, don't you think? Kind of confirms disrespect, would you agree?

(Rest of message about HS283 deleted. I am feeling generous today... but not so generous as to leave that bit of help here.)

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Replying to Tax Dragon:
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By Cylhia66
02nd Aug 2021 07:31

Sorry Tax Dragon. I didn't mean direspect. I'm not sure what else you expected from me? Let me know if you have a specific question and I'll gladly reply. I thought I had got back to everyone. out of respect, that's what I usually try to do.

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Replying to Cylhia66:
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By Cylhia66
02nd Aug 2021 07:33

oops I wasn't the OP here. Ignore me.

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Replying to Cylhia66:
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By Tax Dragon
02nd Aug 2021 09:11

Cylhia66 wrote:

oops I wasn't the OP here. Ignore me.

:-)

Actually, you make the point better than I do:

Cylhia66 wrote:

I thought I had got back to everyone. out of respect, that's what I usually try to do.

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Replying to Tax Dragon:
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By Hugo Fair
02nd Aug 2021 11:20

Possibly not a surprise in the case of OP, whose historical ratio here is 5 Questions posted but only 1 Answer (which was actually a follow-up Q)!
Maybe that metric should be published alongside poster/avatar name at start of a new post?

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Replying to Hugo Fair:
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By Tax Dragon
02nd Aug 2021 17:55

My very point :-)

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