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Trust of Land (Historical)

Who would benefit from a Trust of Land (Historical)?

People who have:

Property(ies) they have purchased for their children or other Beneficiaries that in the past have treated and resided in the property(ies) as their main residence.

Property(ies) where relations (unnamed children) are on the Legal Title (Deeds) of their parents or other relatives property(ies) and have been for a number of years

The Law allows a person to establish a trust relating to land verbally. However the Verbal Trust must be formalised in writing before the next event (sale or transfer).

In the two examples below “Verbal Trusts” have been made although the word “Trust” may never have actually been used.

The following are the main scenarios however there are many others.


Mum and dad purchase a £100K house for their son to live in whilst at university in 2005. Mum and dad are on the Land Registry Title and the son lives there for 10 years. The parents decide to sell the house in 2015 for a purchase price of £300K.

The Problem

Capital Gains Tax (CGT) is due on the profit of approximately £200,000 as the parents already own another property that they live in - Gains are calculated at 28% = a massive tax bill of £56,000!

The Solution

A Trust of Land (historical).

If the above is drafted as a Trust of Land (Historical) then the Capital Gains Tax (CGT) would be £ NIL !! A massive saving of £56,000 of CGT as main residence relief would now apply. However, this work must be done prior to the exchange of contracts for sale in 2015.

If mum and dad do not wish to benefit from the sale proceeds, have not benefitted from the property, and their estates are above their Nil Rate Band then value can be removed from their estates immediately meaning a saving of £120,000 in Inheritance Tax (IHT) !

  • Gift date 2005, start of the ‘7 year clock’
  • Out of the client’s estate for the calculation of IHT in 2012


This is the parent’s main property and here their child is on the Title for mortgage/right to buy purposes. Their son goes on Title of the parent’s property in 2005, to assist with Mortgage Provider requirements. The son no longer lives at the property

Parent’s property where the child is on the Title for mortgage/right to buy purposes in 2005. Now in 2015 the parents decide they wish to sell the property for £750K. Originally paid £100k.

The Problem

Capital Gains Tax (CGT) on the son’s third share of the growth is the property value of £500,000 –
The chargeable gains = £500,000/3 = £166,666 @ 28% = a whopping £46,666 of CGT due.

The Solution

A Trust of Land (historical).

If the above is drafted as a Trust of Land (Historical) then the CGT liability would be £NIL !

The Trust of Land (Historical) is dated on the day it is signed but confirms the situation from a date in the past.

Please note: The information above contains only general planning and is not to be construed as advice for any personal planning. Each strategy recommended is based on individual circumstances.

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