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Any Answers Answered: A declaration of trust

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TAXtv’s Giles Mooney and Tim Good take a look at two questions from the Any Answers forum, this time focusing on declaration of trust and a director charging rent to a company. 

8th Sep 2023
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To view the full questions and AccountingWEB readers’ answers click on the links below.

Can a declaration of trust be used here?

The first question comes from AccountingWEB user Ozzi who had a question on a declaration of trust. "I have a husband and wife client who currently reside in a residential property that they are now looking to let. They have lived there since purchasing a number of years ago and are now looking at moving but want to retain ownership and rent the property. There is a mortgage on the property.

"From my understanding, a declaration of trust can transfer the right to income from one party to another but both have to be current owners of the property. Is this correct?"

Director charging rent to company

The next question from Any Answers that Giles and Tim tackle comes from Minimal Damage. They asked: "A director owns flat that he uses to run his company from and charges the company rent. The company gets CT relief and he reports the income on his tax return, which ideally is offset in full by apportioned expenses. 

"However, the monthly rent charged to the company seems to be much higher (by almost 300%) than when it used to be when it was let out on a commercial basis and the director resides there only from Monday to Friday.

"My initial issue with this set-up is a potential BIK. I know that employees would not be charged on accommodation paid for them by the company while they are working away, but does the same apply to directors who in addition own that property?"

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Replies (2)

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the sea otter
By memyself-eye
08th Sep 2023 18:33

My brother in law, who is/was a qualified solicitor, uses declarations of trust to solve any and every problem with regard to liability. He seems to think he can back date any such trust to achieve the desired (tax) result.
I think he's talking bolleaux

Thanks (1)
Replying to memyself-eye:
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By Justin Bryant
10th Sep 2023 09:52
Thanks (1)