Question 1

What does beneficial interest/equitable interest mean?

Accepted Answer

It means an interest in the economic benefit of property - the benefit is the right to live in the property and right of income from it such as rent or capital gain. Equitable interest has the same meaning as beneficial interest, beneficial ownership.

 

The ownership of land/property in England and Wales is dealt with in the following two ways:

 


	1

	the legal ownership (which isn't a percentage, it is the names of the parties registered on the legal title at the Land Registry); and
	



	2

	the economic benefit, which is also commonly referred to as the beneficial ownership/interest (this is a percentage - either a fixed share or a floating share).
	


 

The legal ownership is separate from the beneficial ownership and the legal owner or owners are not always the same as the beneficial owner/s. The legal owner is said to hold the beneficial interest in the property on trust for the beneficial owner. The beneficial owner of the land will have a right to the income from the property or a share in it, and a right to the proceeds of sale of the property or part of the proceeds. A beneficial interest in property is an equitable interest.

 

Legal ownership can be transferred by a transfer of equity or a sale of the property, however the beneficial interest can be transferred via a deed such as a deed of assignment, deed of gift, deed of trust, declaration of no interest. See HMRC guidance notes here: Ownership and income tax: legal background: ownership: legal and beneficial ownership - separation

Question 2

Can a deed of assignment be back dated?

Accepted Answer

A deed can only be dated as at the date it is signed and witnessed so it cannot be back dated.

Question 3

Can a deed of assignment be reversed?

Accepted Answer

A deed of assignment is a formal legal document that once executed and dated remains enforceable until it is varied using a deed of variation, surrendered using a deed of surrender or the property is sold. If you wish to make a change to the deed then it is more common to surrender the whole deed and then draft a new deed.

Question 4

Do I need to file a Form 17 to HMRC?

Accepted Answer

Form 17 is a self-assessment tax declaration used by married couples who are joint legal owners to confirm to HMRC that they own a beneficial interest in property/income that isn't equal. Where there is no such declaration there is an assumption the share is equal. You cannot file a Form 17 until you have executed your deed. The process is as follows:

 


	1

	(if applicable) Sever joint tenancy at Land Registry
	



	2

	Sign, witness and date deed
	



	3

	File Form 17 with HMRC you complete an online form (not your solicitor), download and sign the Form 17 and send a copy to HMRC along with a copy of your signed deed. Here is the link to complete the form - https://www.gov.uk/government/publications/income-tax-declaration-of-beneficial-interests-in-joint-property-and-income-17
	



	4

	(once confirmed by HMRC) Share income (such as rent) in the new percentage split
	


 

Unmarried couples or married couples with only one party on the legal title do not need to file a Form 17. You should speak to a tax specialist to answer any tax questions you may have.

Question 5

Do I need a deed of assignment or a deed of trust?

Accepted Answer

A deed of assignment is used to assign just the beneficial interest in land/property from one party to another. A deed of trust can also be used to do this, however it also includes other clauses such as how to sell the property. For most married couples who simply want to assign their beneficial interest in an investment property a deed of assignment suits their needs. If you would prefer a deed of trust we can help and can quote you for this.

 

Click here to see what deed of trusts we offer

Question 6

What tax is payable on an assignment?

Accepted Answer

We do not provide tax advice, however can refer you to an accountant, ICE Professional Services, who can provide a 15 minute consultation for &pound;199 INC VAT and you and discuss questions such as:

 


	Is there any stamp duty on a transfer from husband to wife?
	Is there any capital gains tax when gifting beneficial interest in property?
	Is there any inheritance tax payable?
	Transferring a property into company, is there any stamp duty / capital gains tax payable?
	Transferring a property to a spouse, is there any stamp duty / capital gains tax payable?


 

Please let us know if you would like to be introduced to ICE Professional Services and we will get them to give you a call.

 

How to file a SDLT tax return?

Form SDLT1 is required for transactions in which consideration of more than &pound;40,000 is paid (including the transfer of debt or money changing hands) even if no Stamp Duty Land Tax is actually payable because the consideration is below the threshold.

 

To file an SDLT declaration to HMRC use this form - How to send paper returns to HMRC

 

We do not offer this service. You are responsible for reporting the transaction and paying any tax due to HMRC.

Question 7

I am the sole owner - Can I assign the debt?

Accepted Answer

You cannot assign debt so as to remove your liability to pay the debt. For example, if John is the sole legal and beneficial owner of a property and his name is solely on the mortgage, even if he were to state in a deed that he assigns the debt to his wife Jane, John will always be solely liable for repayment of the mortgage.

 

Our standard deed of assignment doesn't assign debt.

Question 8

Does Settlement legislation effect the transfer?

Accepted Answer

As long as the transfer of the beneficial interest is an outright gift of that element of the property (i.e. it doesn&rsquo;t need to be an outright gift of the whole property, just the transferred part) then Settlement Legislation does not apply.

 

You should speak to a tax specialist to advise you on the tax implications on your transfer based on your circumstances.

 

Read more about settlement here - HS270 Trusts and settlements - income treated as the settlor's (2021).

Question 9

Whose name goes on the rental agreement (AST)?

Accepted Answer

The rental agreement is drafted in the name/s of the legal owners registered at the Land Registry not the beneficiaries. The legal owners hold the property on trust and manage it on behalf of the beneficial owners.

Question 10

Do I need to register the deed at the Land Registry?

Accepted Answer

You do not need to update the Land Registry if you are using a deed of assignment to assign beneficial interest to a legal/non-legal owner.

A Deed of Assignment is effective from the day it is signed, dated and witnessed and does not need to be registered if you choose not to.

How can we help?

Deed of Assignment

Deed of Assignment Cost

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How can we help?

Deed of Assignment

Deed of Assignment Cost

How do I get a Deed of Assignment?

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