Can you put a rental property in trust, and who pays tax on the rent?

In the UK, a rental property can be held in trust, but the tax answer depends on the type of trust and who is entitled to the income. The TR1 point is England and Wales only; Scotland and Northern Ireland use different land-registration documents.

Can you put a rental property into a trust?

Yes, you can put a rental property into a trust in the UK, including an already rented property, but the transfer can trigger land-registration, SDLT or LBTT/LTT, mortgage-consent, tenancy-management and inheritance-tax consequences before the rent is taxed in the trust. GOV.UK describes a trust as managing “money, investments, land or buildings” for beneficiaries, and trustees can hold land as trust property; in England and Wales, a trust of land includes “any trust of property which consists of or includes land”. A parent can put a rental property in trust for a daughter, but that does not make the transfer tax-free: for example, when settlement trustees acquire land for SDLT purposes, HMRC treats the trustees as the purchasers, and a lifetime transfer into many trusts can also bring inheritance tax if value exceeds the available nil-rate band. Once the trust owns and lets UK property, HMRC treats it as a rental business taxable on profits.

What tax does a trust pay on rental income?

A UK trust does not get a tax-free first £1,000 of rental income from 2024–25: trustee net income at or below £500 is treated as £0, but if it is above £500, tax is due on the full amount, normally at the trust rate of 45% for discretionary or accumulated rental income, with an enacted 47% property trust rate applying from 2027–28. The old ITA 2007 s.491 first-slice rule is no longer the live answer, because legislation now says that provision “no longer has effect”; the replacement de minimis rule in ITA 2007 s.24B uses £500, subject to the multiple-settlement rules. Interest-in-possession and other non-discretionary trust structures can be different, because income tax may be charged at the default basic rate for persons other than individuals, while the beneficiary may then be taxed on their entitlement. The practical question is therefore not simply whether a trust pays tax on rental income, but which trust type receives it.

Does a trust need to complete a tax return for its rental income?

A UK trust with taxable rental income normally completes the SA900 Trust and Estate Tax Return with SA903 UK property pages, but trustees file in their capacity as trustees, not personally; the main exception is a bare trust, where the named beneficiary reports the income directly on their own tax return. HMRC’s SA903 page says to use those supplementary pages “to record land and property income on the SA900 Trust and Estate Tax Return”, and HMRC’s SA900 notice says it requires the recipient by law to send a return for the tax year. If the trust is chargeable and HMRC has not issued a return notice, the trustee notification deadline is six months from the end of the tax year; once an electronic trustee return is required, the online filing deadline is 31 January after the end of the tax year. Trustees usually need the trust UTR before filing, and HMRC says online SA900 filing requires commercial trust-and-estate Self Assessment software.

Do you pay tax on money you receive from a trust?

You may pay tax on money received from a UK trust, but the answer depends on whether the payment is bare-trust income, discretionary or accumulation trust income, ordinary trust income reported to you, or capital. A bare-trust beneficiary is responsible for declaring and paying tax on the trust income, so a trust fund held bare for a beneficiary is usually taxed as that beneficiary’s income. By contrast, income paid from an accumulation or discretionary trust is treated by GOV.UK as already taxed at 45%, and the beneficiary may use the tax credit position on their own return. Trustees use form R185 to tell beneficiaries about trust income paid or treated as paid, and trust income received by an individual goes on SA107 with the SA100. A capital payment from a UK-resident trust is often not income-taxable as income, but capital payments from non-resident trusts can bring Capital Gains Tax, and inheritance tax on relevant-property trust exits is the trustees’ duty rather than a receipt tax on the beneficiary.

When do you need to complete a TR1 form?

In England and Wales, you need a TR1 when transferring the whole of one or more registered titles, including a sale, gift, transfer into trust, or transfer of equity of the whole registered property. HM Land Registry says form TR1 is used “to transfer the whole of the property in one or more registered titles”, and the Land Registration Rules require a registered-estate transfer to be in the appropriate prescribed form, which includes TR1. A TR1 for a registered title is not void simply because it is not registered within two months of completion; the two-month voiding rule applies to first registration of a previously unregistered qualifying estate, and the Land Registration Act defines that qualifying estate as “an unregistered legal estate”. For registered land, the key point is different: the transfer does not operate at law until registration is completed. In Scotland, ownership is generally transferred by a disposition; in Northern Ireland, Land Registry Form 9 is used for a whole folio by the registered full owner.

Last reviewed August 2026.

Sources

• GOV.UK, Trusts and taxes — “A trust is a way of managing assets (money, investments, land or buildings) for people.” Source
• Trusts of Land and Appointment of Trustees Act 1996 s.1 — “(a)“trust of land” means (subject to subsection (3)) any trust of property which consists of or includes land, and” Source
• Trustee Act 2000 s.8 — “(a)as an investment,” Source
• HMRC SDLT Manual SDLTM31720 — “When the trustees of a settlement acquire land, the trustees will be regarded as the purchasers for SDLT, therefore all the normal rules regarding notification and payment relate to the responsible trustees.” Source
• GOV.UK, Trusts and Inheritance Tax — “If the trustees pay, the rate of tax is 20%.” Source
• HMRC SA903 Notes 2026 — “If the trust or estate owns land or property in the UK and enters into any transaction that results in rents or other receipts from the land or property, it’s treated as operating a rental business and is taxable on the profits.” Source
• Income Tax Act 2007 s.491 — “This version of this provision no longer has effect.” Source
• Income Tax Act 2007 s.24B — “The taxpayer’s net income in their capacity as a personal representative of a deceased person or trustee of a settlement (as the case may be) at the end of Step 2 of the calculation in section 23 is taken to be £0.” Source
• Income Tax Act 2007 s.24B — “(a)£500, or” Source
• GOV.UK, Trusts and Income Tax — “Tax is due on the full amount if the income is more than the tax-free amount.” Source
• Income Tax Act 2007 s.479 — “Otherwise, income tax is charged on the income at the trust rate.” Source
• Income Tax Act 2007 s.9 — “The trust rate is 45%.” Source
• Income Tax Act 2007 s.9 — “The property trust rate is 47%.” Source
• Income Tax Act 2007 s.11 — “Income tax is charged at the default basic rate on the income of persons other than individuals.” Source
• Taxes Management Act 1970 s.7 — “(a)in the case of a person who falls within subsection (1A), the period of 6 months from the end of the year of assessment, or” Source
• Taxes Management Act 1970 s.8A — “(b)in the case of an electronic return, on or before 31st January in Year 2.” Source
• GOV.UK, Self Assessment: Trust and Estate UK Property SA903 — “Use supplementary pages SA903 to record land and property income on the SA900 Trust and Estate Tax Return.” Source
• HMRC SA900 Manual 2026 — “This notice requires you by law to send us a tax return giving details of income and disposals of chargeable assets, and any documents we ask for, for the year 6 April 2025 to 5 April 2026.” Source
• GOV.UK, Trusts and Income Tax — “If you’re the beneficiary of a bare trust you’re responsible for paying tax on income from it.” Source
• GOV.UK, Register a trust as a trustee — “You’ll need the UTR to start filing Self Assessment tax returns.” Source
• GOV.UK, Self Assessment: Trust and Estate Tax Return SA900 — “You can send this tax return online instead of downloading the form, you’ll need to buy software for trust and estate Self Assessment tax returns to do this.” Source
• GOV.UK, Beneficiaries paying and reclaiming tax on trusts — “If you’re the beneficiary of a bare trust you are responsible for declaring and paying tax on its income.” Source
• GOV.UK, Beneficiaries paying and reclaiming tax on trusts — “With these trusts all income received by beneficiaries is treated as though it has already been taxed at 45%.” Source
• Income Tax Act 2007 s.494 — “The discretionary payment is treated as if it were made after the deduction of a sum representing income tax at the trust rate on the grossed up amount of the discretionary payment.” Source
• HMRC Trusts, Settlements and Estates Manual TSEM3781 — “Payments are capital and not taxable on him.” Source
• HMRC HS301 — “Capital Gains Tax may be due if you have received a capital payment or benefit from a non-resident, dual resident or immigrating trust.” Source
• GOV.UK, Trusts and Inheritance Tax — “Once it is set up, it’s the trustees’ duty to make sure Inheritance Tax is paid on any further transfers into or out of the trust.” Source
• GOV.UK, R185 Trust Income — “If you’re a trustee, use form R185 (trust income) to tell beneficiaries about amounts paid or entitlements to income from a trust.” Source
• GOV.UK, Self Assessment: Trusts etc SA107 — “Use supplementary pages SA107 to record income you received from a trust, settlement or deceased person's estate on your SA100 tax return.” Source
• GOV.UK, Registered titles: whole transfer TR1 — “Use form TR1 to transfer the whole of the property in one or more registered titles.” Source
• Land Registration Rules 2003 r.58 — “58. A transfer of a registered estate must be in Form TP1, TP2, F1... TR1, TR2, TR5, AS1 or AS3, as appropriate unless it is effected by an electronic document to which section 91 of the Act applies.” Source
• Land Registration Act 2002 s.27 — “If a disposition of a registered estate or registered charge is required to be completed by registration, it does not operate at law until the relevant registration requirements are met.” Source
• Land Registration Act 2002 s.7 — “If the requirement of registration is not complied with, the transfer, grant or creation becomes void as regards the transfer, grant or creation of a legal estate.” Source
• Land Registration Act 2002 s.4 — “For the purposes of subsection (1), a qualifying estate is an unregistered legal estate which is—” Source
• Registers of Scotland — “Ownership of land is generally transferred in a formal deed called a disposition.” Source
• Land Registration etc. (Scotland) Act 2012 s.50 — “Registration of a valid disposition transfers ownership.” Source
• Department of Finance Northern Ireland, Transfers and related matters — “Form 9 may be used only for transfers of all the land in a folio, or folios, by the registered full owner.” Source
• HM Land Registry, guidance completing form TR1 — “You don’t have to use a solicitor or other legal adviser to complete the form and send it to us, but the help we can give you is limited.” Source