Putting a rental property in trust for your children

Putting a rental property in trust for your children

1. 1

   Which kind of trust?

   Bare trustThe child owns it outright and can take it at 18 (16 in Scotland). Simple, but you lose control.

   Discretionary trustTrustees decide who benefits and when. Keeps control, but has its own inheritance tax charges.

   Life interestOne person gets the rent; the property passes to others later.
2. 2

   Check the mortgage

   Most buy-to-let lenders must agree first. If the trust takes over the loan, that debt counts as a price for stamp duty.

3. 3

   Get the trust deed or declaration of trust signed

   A trust of land must be in signed writing. A solicitor isn't legally required, but strongly advisable. The trustees keep the original deed.

4. 4

   Transfer the title to the trustees

   A child under 18 can't hold the legal title in England and Wales. Land Registry adds a restriction (usually Form A) to the title.

5. 5

   Tax on the way in

   Bare trust or gift to a personInheritance tax: no tax if you live 7 more years. CGT: taxed as a sale at market value — no holdover relief. Report and pay within 60 days.

   Discretionary / life-interest trustInheritance tax: 20% now on value above the £325,000 nil-rate band. CGT: holdover relief (s260) can defer the gain.
6. 6

   Register on the Trust Registration Service

   Trusts holding UK land — bare trusts included — generally must register with HMRC.

   ⏱ Within 90 days

7. !

   Don't keep the rent

   If you keep benefiting, it stays in your estate for inheritance tax (gift with reservation). Rent on a parent's gift to their own child under 18 is taxed as the parent's income if over £100 a year.

8. 7

   Ongoing

   Trustees keep accounts, do tax returns where needed and update the register. Discretionary trusts: up to 6% charge every 10 years and when property leaves.

   ⏱ Every year · every 10 years

9. ✓

   Set up properly

   Ask Wala to talk it through, then get a tax specialist to model your numbers before you sign.

Checked against official sources on 2 November 2026 · General information, not legal advice · landlordwala.com/diagrams/property-trust-children