Joint owners and tax payable on rent

bjbyorkshire

My husband and myself jointly own a small property which is being rented out throuh an estate agent. My husband is a tax payer but I am not. If I make myself into a company (not sure how I would do this) then make sure the rent is paid into a bank account in my name only would this be permissable for the income tax not to say that as the house is jointly owned and that my husband is liable to pay tax on half of the rent but I dont pay tax on the other half.

Is this a legitimate way to pay less tax or is there any other way round this other than re-registering the house with the land registry in my sole name? This is a bit of a hastle as I have only recently registered it in our joint names.

Thanks if anyone can help.

Fire_Fox

It's well worth running an advanced search, this issue comes up frequently.
http://www.hmrc.gov.uk/manuals/pimmanual/index.htm
http://www.hmrc.gov.uk/manuals/bimmanual/index.htm

bjbyorkshire

Thanks, after reading through all of the link that you posted Firefox I feel pretty sure it means that hubby is responsible for his half being taxed and that my half will be under the tax threshold. As I expected really.

I did not know what words to use to run an advanced search on here. I did however read down through about 20 pages of posts and try a few phrases to search for the answer before posting my question but didnt come up with a definitive answer to my question.

Not being lazy, honestly.

00ec25

for married couples with joint ownership you are resticted to 50/50 share

setting up a company will not remove his entitlement (liability) to half the income uness the company owns the house, as you only have one property there is no sense in going to the considerable administrative trouble and some expense) of operating a company

the normal advice to married cpouples is to re-register the property as tenants in common with the ownership simply aligned with whatever gives you the most income without becoming a tax payer
Whilst it is tru that you can transfer a share of the property back to him at anytime, having it held constantly as tenants in common preserves any CGT exemptions that you have already built up and also keeps both of you entitled to your personal allowance without having to risk a transfer close to you selling up -the latter being a tactic HMRC is seeking to stamp on

Once having re-registered at the land registry you then use Form 17 to notify HMRC of the income share
http://search2.hmrc.gov.uk/kb5/hmrc/forms/view.page?record=TS9D3da9t7I&formId=5159
time limit for submission
http://www.hmrc.gov.uk/manuals/tsemmanual/TSEM9862.htm
here is part of what HMRC do with it
http://www.hmrc.gov.uk/manuals/tsemmanual/TSEM9870.htm


PS if you do reregister as TIC then update your wills as the survivor does not automatically get the deceased's half on death, unlike with joint tenants - again TIC has some advantages over JT in terms of IHT planning - if thats relevant of course!

Land_Registry

00ec25 wrote: »

for married couples with joint ownership you are resticted to 50/50 share

the normal advice to married cpouples is to re-register the property as tenants in common with the ownership simply aligned with whatever gives you the most income without becoming a tax payer

You may of course already be aware of how you registered your joint ownership but just in case, and perhaps for the benefit of anyone viewing this thread) take a look at our Public Guide on the subject of joint property ownership.

The guide explains the differences between the two kinds of ownership, where you can find out what your kind of ownership is, and how to amend Land Registry’s records if you change your kind of ownership.

bjbyorkshire

Thanks so much for the help re the tax implication of owning/letting the house.

I have read and now need to digest all of the points given. I think that paying tax on half of the rent is the way we will go at first but after reading and digesting the info I might then change my mind. Hubby and I have only just re made joint wills and registered both our own home and the inherited house we are renting as joint tennants on the advice of a solicitor and the costs of doing all of this have not been cheap.

Thanks again folks, this forum has been invaluable reading for me since the death of our darling daughter thrust us into the position of owning a house we never expected to have and the dilemma of what to do with it for the best. My hubby has had a mental breakdown with all of the stress of the last 6 months and I have had to sort out all the financial and personal effects of my daughter which as you can guess is not what any of us expect to have to do. If I have made mistakes then I have done what I thought best and we can always try to sell the house after the 6 month first tenancy is over but renting was my preferred option so I am happy to give it my best shot for a time.

regards
bjbyorkshire