Winding up a Declaration of trust and CGT implications

H died in 2017 leaving his 1/2 share in the residential property on a "life interest trust " to W. W had signed a declaration of Trust in January 2016 in respect of her half share in property leaving her half to her children as the beneficiaries of the trust. W is now selling this property. For CGT purposes, is it a disposal by the trustees with allowance of £5,850 or by the beneficiaries, each beneficiary getting their individual annual CGT allowance? If the disposal is by trustees, can I put something in place to mitigate the CGT payable?

Ruksana Kaskar
Hamilton Davies LLP

I am assuming that the property concerned is not the principal private residence of W. That being the case, as I said, The gain respect of H’s Half share will be accessible on his trustees. As regards the gain in respect Of the half share for which W Has made a declaration of trust in favour of her children will be assessable On the children assuming that they are absolutely entitled and they will therefore be able to use their CGT allowances. Not sure what you mean in the last part Question. Obviously I’m going on the deduct the usual expenses on sale and of course the cost of any capital improvements made since the property was acquired.

Patrick Moroney Bwl solicitors

Sorry my response was made using voice recognition and obviously it did not recognise some of what I said but I am sure you will get the meaning! I must learn to check more thoroughly – can’t get the staff !

Patrick Moroney
BWL solicitors

I am not very clear on who is selling. Is W selling the half interest she is holding as bare trustee for her children? Or are the trustees of the Will Trust also selling their half? So far as W’s sale is concerned, the beneficial owners’ annual exemptions will apply to the gain arising on their respective interests. The trustees - if they are selling their half - will of course be chargeable thereon, but will perhaps enjoy exemption under S.225 if the property is the main residence of W. I am assuming the Will Trust is UK resident.

Ray Magill

Hi Ray

Thanks for your response.

Trustees of the Will trust and trustees under the Declaration of Trust are selling.

The property is W’s main residence.

Yes, W is selling as bare trustees for the children.

Yes, the deceased H was UK resident.

Ruksana Kaskar
Hamilton Davies LLP