Tax advice on renting please

dogandy

Hello there. My wife and I are about to begin a year long tour of the UK and Europe in our motorhome. We have recruited a local estate agent to find some tenants for our property, and are in the latter stages of sorting this out. I am currently in receipt of an occupational pension amounting to 19k per year. My wife will get about 5.5k per year on her pension. It seems to me that I should try to get all income from the rental of the property in my wifes name, as she will have "spare" personal allowance, whereas I would pay tax on all of it. The problem is that our property is in joint names. Is it as easy as changing the name on the deeds?, or is it more complicated. I am not trying to avoid the tax, just maximize my wife's tax free allowance.
Thanks

[Deleted User]

There is a very similar thread about this on here already.

If you change the property to her name, what happens if anything goes wrong in the future - you may be left with nothing.

We all think that nothing will happen, until it does!

Davide123

dogandy wrote: »

I am not trying to avoid the tax, just maximize my wife's tax free allowance.
Thanks

That's a bit contradictory

nomunnofun

Aside from the normal concerns as tactfully detailed by assj, there is no problem in transferring the house into your wife's sole name.This is just good tax planning. Do it properly and keep all documentation in the event of any queries . One more thing - you must apply to have the rent received gross in the UK under the non-resident landlord's scheme.

holly_hobby

You do not need to tsf the entire property ownership into your wife's name (if you don't wish to), merely in this case adjust the % of legal ownership you hold. Which means that you will retain joint legal ownership, control and rights over the dwelling rather than losing all rights.

There is a very similar thread on here I've already commented on, but in a nutshell ...

You change the ownership from beneficial joint tenancy basis (where as a married couple HMRC assume the rental income is split 50/50), to a Tenents In Common arrangement - where you may unequally divide the % of legal ownership between you, with of course for the benefit of this exercise, the weighting of ownership in favour of the lower tax payer .. i.e 99/1 in favour of Mrs Dogandy ... (or whatever % you decide).

You then advise HMRC of this TIC ownership and resulting unequal rental income division ( which MUST mirror that as effected under the TIC arrangement, ie 99/1 or whatever chosen ) via HMRC Form 17 (attached below, and as you can see self explanatory to complete).

The resulting impact of this is that you each report your individual share of rental income, as per the TIC division e.g 99/1, via your annual self assessment returns, whereby you will be taxed accordingly on your own individual share, at your own individual highest rate - job done (and she can't sell it and run off to Mexico with the milkman without your signature ... :eek: )

A conveyencer will assist, if you feel nervous about doing this yourself directly with Land Registry ...

NB - although the % of legal ownership will be unequal following the TIC, you both remain jointly and severally liable for any mortgage debt secured on the property.

Hope this helps ... and you both enjoy your travels !!

Holly x

Heres HMRC Form 17 for you to download and print off - http://www.hmrc.gov.uk/forms/form17.pdf

zygurat789

Quote:I am not trying to avoid the tax, just maximize my wife's tax free allowance.
Thanks

Originally Posted by dogandy
I am not trying to avoid the tax, just maximize my wife's tax free allowance.
Thanks

That's a bit contradictory.

It was totally contradictory. We are all trying to avoid tax, even DC and GO I'm sure.

ISAs are tax avoidance, even claiming your personal allowance is tax avoidance.

We're all at it, it's the only sensible way to behave.

holly_hobby

zygurat789 wrote: »

Quote:I am not trying to avoid the tax, just maximize my wife's tax free allowance.
Thanks

Originally Posted by dogandy
I am not trying to avoid the tax, just maximize my wife's tax free allowance.
Thanks

That's a bit contradictory.

It was totally contradictory. We are all trying to avoid tax, even DC and GO I'm sure.

ISAs are tax avoidance, even claiming your personal allowance is tax avoidance.

We're all at it, it's the only sensible way to behave.

Exactly, there is absolutely nothing wrong in ensuring that you utilise all reliefs, allowances and exemptions and lawful arrangements to mitigate your tax liabilities .... in fact it would be silly not to do this.

Hope the above guidance helps

Holly x