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Clare
Clare, Solicitor
Category: Property Law
Satisfied Customers: 33806
Experience:  I have been a solicitor in High Street Practise since 1985 with a wide general experience.
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/Madam, I am a 29 year old male living in London.

Resolved Question:

/Madam,
I am a 29 year old male living in London. My father (who is 57 years old) has planned to purchase a property (in the value of around £400k) under his own name (i.e. so that he will be shown as the legal owner on the Land Registry Deeds) but has planned to hold it upon trust . Furthermore, he has told me that he will include a provision in the trust deed stipulating that after 5 years has elapsed (from the moment of purchase) the ownership of the property will be transferred to myself.
We had a question regarding Stamp Duty Land Tax (SDLT) with regards ***** ***** property's ownership being transferred from my father to myself in 5 years' time.
My question is:
"If a property is purchased in the manner as mentioned above, then would SDLT need to be paid TWICE (i.e. at the initial purchase stage AND at the transfer stage)? ... Or, would it only need to be paid ONCE (only at the initial purchase stage)?
I put forward that exact question to two individuals (one of which was an accountant, the other which was a solicitor) and I received two different answers:
1) ACCOUNTANT'S RESPONSE
"Regrettably this may be the case as the move from a trust status to you might well be deemed a disposal thus attracting SDLT. Here is an extract from HMRC Advice Note SDLTM31710a:
["If a bare trustee or nominee acquires property on the half of the beneficiary that will be treated as an acquisition by the beneficiary, the beneficiary being the person liable to stamp duty land tax and responsible the land transaction return to HM revenue and customs"]
2) SOLICITORS RESPONSE
"Stamp Duty Land Tax (SDLT) is payable if there is money or money's worth (known as consideration) changing hands when property is transferred. When the property is transferred from your father to you it will will be consideration which means no SDLT will be payable. SDLT will be payable on the initial purchase."
My father and I wanted to know which one of the two statements was correct on this particular issue. We would be happy to provide more information (should it be required) to help the expert answer this .
Many thanks.
Submitted: 2 years ago.
Category: Property Law
Expert:  Clare replied 2 years ago.

Thank you question
My name is ***** ***** I shall do my best to assist you.
On this occasion the answer given by the solicitor is the correct one.
I hope that this is of assistance - please ask if you need further details
Clare
Customer: replied 2 years ago.
Dear Claire,
Thank you response.
Could you kindly, however, elaborate and provide more detail on why the solicitor's view is correct whilst the accountant wrong?
The reason we are curious to know the answer to this is because it strikes us as rather odd (and confusing) on how such a (seemingly) unambiguous statement by the HMRC could in reality be completely contrary to what they have stated.
Thank you your help.
Many thanks
Expert:  Clare replied 2 years ago.

My apologies - I really should have explained that without your needing to ask.
It is a question of pedantic wording I am afraid.
The Declaration of Trust is NOT the same as a Bare Trust.
This money is a gift to you from your father and is being given in the form of the property subject to a Declaration of Trust.
The property will be eventually be released to you.
There is only one transaction - and that is the only time that the SDLT is payable
Clare
Clare, Solicitor
Category: Property Law
Satisfied Customers: 33806
Experience: I have been a solicitor in High Street Practise since 1985 with a wide general experience.
Clare and other Property Law Specialists are ready to help you
Customer: replied 2 years ago.

Dear Claire,

I have one more question I would like to ask you please.

My father wishes to purchase a property as a gift , and that it has been agreed that the the purchase will be made in his name, but the beneficial interest of the property will be held upon trust by my father for myself.

The Declaration of Trust includes the following:

(i) A provision that my father will be entitled to all income arising from the property until such time as the legal interest to the property is transferred to myself: and

(ii) A provision which allows me, after 5 years, to give written notice to my father that I wish the legal interest of the property to be transferred to my sole name.

The question I had was:

Based on the above arrangement, would I still be eligible tested benefits (e.g. housing benefit)? - Given that the legal ownership would be under his name ( years) and all the income (from the proceeds of renting out the property) will be going to him?

Thanks a lot response.

Expert:  Clare replied 2 years ago.

Will you be living in the property?
Clare
Customer: replied 2 years ago.
Dear Clare,
Well there are 2 potential scenarios that will occur once my father has purchased the property, which are either:
Scenario 1 - He will rent it out (and the rental income will go to him), or,
Scenario 2 - He will allow me to live in it.
(He definitely won't be living in the property himself - as he already has his own flat that he is currently living in)
Given that neither him or I are 100% certain which of these 2 scenarios will occur (as much of it will depend on a number of factors such as his financial situation at that time), could you kindly provide me the answer scenarios please?
Many thanks. *****
Expert:  Clare replied 2 years ago.

You will not be able to claim Housing benefit if you live in the property owned by your father.
However if it is rented to someone else then you remain eligible until the property is transferred to you
Clare
Customer: replied 2 years ago.

Thank you Clare. You have been very helpful.

Expert:  Clare replied 2 years ago.

You are most welcome - I hope all goes well
Clare
Customer: replied 2 years ago.
Thank you.

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