Mark McLaughlin looks at when a constructive trust can arise and the potential capital gains tax implications.
On a property disposal by an individual, the legal and beneficial ownership of the property is normally transferred simultaneously. However, it is important to appreciate that legal and beneficial ownership are not the same; beneficial ownership is generally relevant for capital gains tax (CGT) purposes rather than legal ownership (NB this article considers the law in England, Wales, and Northern Ireland).
Potential indicators that someone is the beneficial owner of the property include that they occupy the land, receive any rental income from the land, and provided the funds to purchase the property (see HM Revenue and Customs (HMRC) guidance in its Capital Gains Manual at CG70230).
However, the risk of disputes with HMRC over the identity of the beneficial owner of property can be mitigated by a
