What is a deed of trust for splitting property ownership?

Full answer

A deed of trust, sometimes called a declaration of trust, is a legally binding document that sets out the beneficial ownership of a property -- who really owns what share of the equity, the proceeds on sale, and frequently the rental income -- as opposed to the legal title held at the Land Registry. Co-owners can hold as joint tenants (equal, with right of survivorship) or as tenants in common in defined shares; a deed of trust records those shares and any other agreed terms. Who uses it: unmarried couples where one put in a larger deposit, family members buying together, friends investing jointly, or a parent helping a child onto the ladder. It protects each party's contribution if the relationship ends or the property is sold, by recording, for example, an 70/30 split rather than a default 50/50. Tax effects: the beneficial split usually drives the tax outcome. Rental profits are normally taxed in line with beneficial ownership shares, so a deed of trust can shift income towards a lower-rate owner -- though for married couples and civil partners, HMRC generally taxes property income 50/50 unless a Form 17 election (backed by a deed of trust showing the true unequal split) is made. On sale, each owner's share of the gain is taxed separately, each with their own GBP 3,000 Capital Gains Tax annual exempt amount for 2026/27 and their own rate (18% within the basic-rate band, 24% above). Worked example: two unmarried co-owners hold 60/40 under a deed of trust and make a GBP 40,000 gain. The 60% owner is taxed on GBP 24,000 and the 40% owner on GBP 16,000, each able to set their GBP 3,000 annual exempt amount against their slice. Use a capital gains tax calculator to model each owner's liability, and take legal advice to draft the deed correctly.

Try the calculator