CG65417 - Private residence relief: settled property: implied trust

Implied trusts arise by the operation of law in certain well established circumstances. But it can be extremely difficult to decide whether a particular set of facts will, in law, lead to the conclusion that an implied trust has arisen. Subject to the guidance below you should follow the instruction at CG33250.

This instruction, together with CG65420+, is to help you to decide for the purpose of private residence relief alone and in simple cases whether or not a trust will be implied. If you have a case which cannot be dealt with in accordance with these instructions you should follow the instructions at CG33250.

If you decide that the facts of your case are such that the existence of a trust should be inferred you should consider what liabilities may arise. In particular you should consider

• whether a chargeable gain arose when the property was transferred into trust, see CG35700+
• whether the beneficiaries of the trust have become absolutely entitled to the trust property and if so whether a chargeable gain arises, see CG37000+
• whether the trust property has reverted to the settlor on death of the life tenant. If so the deemed consideration will be such an amount as to give rise to neither a gain nor a loss to the trustees; in which case private residence relief cannot arise, see CG36457