A Declaration of Trust can have implications on Capital Gains Tax, Income Tax, Stamp Duty Land Tax and Inheritance Tax. The following information is highly generalised, and you should seek financial advice from a chartered accountant before making a declaration of trust. Capital Gains Tax on a Declaration of Trust You will be liable for capital gains tax if you are giving someone a beneficial interest in exchange for a consideration - this means they are paying for the share they are being given unless the parties are a married couple or civil partners. Income Tax on a Declaration of Trust If you and your other co-owners are in different tax brackets, it can be more tax efficient for the owner on the lowest tax bracket to own a greater share of the property. You cannot split the income differently from how you own the property, so if you declare an 80/20 split for tax efficiency, this is how the property will be divided in a breakup. If you are married or civil partners, you will also need to file a Form 17 with HMRC if you own unequal shares. Stamp Duty on a Declaration of Trust If someone is being given a share of the interest for a consideration (payment, including using a mortgage), then they will have to file SDLT forms with HMRC. If the amount paid falls in the tax bracket for standard rate SDLT, they will have to pay tax on the full consideration. If the consideration paid is over £40,000, they will have to pay SDLT at the second home rate unless the parties are a married couple or civil partners. Inheritance Tax on a Declaration of Trust There are limitations on IHT-free gifts, including interests in property. You can gift (in this case, make someone a beneficial owner for no consideration) up to £3,000 per year. If you gift a share of a property and its value exceeds the tax-free limit, then things get complicated if you die within seven years of making the declaration. The first £325,000 of the total estate is tax-free, but any gifts made up to 7 years prior to your death would be included in your estate for inheritance tax purposes. IHT is usually paid on the whole estate from the proceeds of the estate. !sub-layout{663}sub-layout!