Joe Norris

Registered with
Tuesday 21st March 2017

Latest Comments

Total Number of Property118 Comments: 3

Joe Norris

21:16 PM, 26th June 2017, About 5 years ago

Inheritance for 12 year old and declaration of trust!

The first question here is: who is holding your child's money as trustee? If it's not you, then you have no ability to spend the money at all and that is the end of the matter.

If it is you, it would seem very dubious/ risky for a trustee to use funds held in trust to purchase their own assets. There is a conflict of interest. It might be permissible to do this as a question of trust law but you should check with a lawyer. Even if it is permissible, you would need to be very careful.

In answer to your question, the only thing you have to sell is an encumbered interest in the property, which is valued at £50k for a 100% interest. Charging your child £50k for a 1/3 interest would seem a very clear breach of trust - i.e. overcharging her.... Read More

Joe Norris

19:35 PM, 21st March 2017, About 5 years ago

New Landlord Tax Could Affect 4.6 million Tenants

Is there an element of wishful thinking to this...? Anyone looking for tenants in and around London at the moment knows that you have to price keenly or face a void. It would be nice if I had some magic ability to dictate rents, rather than just charging what the market can support, but unfortunately this just isn't the reality of the situation. In fact I think official statistics are showing 5% year on year falls in London at the moment - it just isn't possible to impose rent rises in a market which is falling by 5%.... Read More

Joe Norris

19:27 PM, 21st March 2017, About 5 years ago

Declaration of trust from company to individual?

"The company would have to pay corporation tax on profits made over an above the purchase price (based on valuation) PLUS, the beneficiary would have to pay SDLT (or LBTT in Scotland) on the transfer and all income PLUS, mortgage expenses and profits would then need to go on the beneficiary’s tax return. This could result in significantly more income tax being payable, especially if profits plus disallowed mortgage interest and finance charges pushed the beneficiary into a higher rate tax band."

I'm not sure that all of this is right.

I agree that the company would have to pay corporation tax on profits and future rent would be taxable on the beneficiary. However, there would be no SDLT as there would be no consideration. There is only deemed market value consideration for SDLT purposes when property goes into a company, not when it comes out of one.

In addition, the "elephant in the room" here is that the declaration of trust would be treated as a distribution by the company. It may not be possible to do this at all if the company has insufficient distributable reserves. Worse by far, even if the distribution can be lawfully made, the value of the property would be taxable on the shareholder at dividend rates (up to 38.1%).

If for whatever reason you want the property held by the individual then to avoid all the above you would need to argue that the company acquired the property as a nominee for the individual right from the outset and that it was never the beneficial owner - which may or may not be possible, depending on how the company was funded. If there is any chance of doing this (and there may not be) doing a declaration of trust would be a bad idea, as you would be effectively admitting that the company is currently the beneficial owner. Moving the property out of the company's beneficial ownership would then have all the adverse consequences described above.... Read More