Tax Examples

Real case example of the effective use of a Trust Declaration to save tax.

The following is a real case example how to use a Trust Declaration to save tax.
Finance changes with typical earnings, one rental property and Trust Declaration.

Tax Example:

Assume the following based on the figures for tax year 2022-23

  • Personal allowance of £12570
  • Higher 40% tax band starts at £50270


Background information for rental business:

Salary      £55000
Rental income from one property  £9600
Expenditure costs              £1600
Profit excluding finance £8000
Finance costs £3000
Total income  £63000

The tax payable to HMRC on the rental income for tax year 2022-23 is £2600

Notes – Trust Declaration to save tax

(a) The total income of £63000 for tax year 2022-23 is above the £50000 child benefit threshold. The benefit is reduced by 1% for each £100 above the threshold and therefore any child benefit is reduced to zero due to being above the £60000 upper threshold.

(b) A Trust Declaration was supplied by Tax Landlord Ltd for the start of the 2022-23 tax year. The spouse income was only £5500 a year and by utilising the Trust Declaration to apportion the full 100% rental income reduced the tax to zero. Note that the spouse received the full benefit of the tax relief for the finance costs.

Important – Trust Declaration to save tax

Please examine your income and rental profits and try and determine whether a Trust Declaration may be suitable. I am happy to advise based on your personal circumstances. The cost of a Trust Declaration is just £39 which includes advice on completing the documentation and the additional service of any later guidance and clarification on any issues concerning its application.