Transferring Property income to wife to avoid 40%. Is this possible?

Pythagorous

Hi All,
I'm currently in the 40% tax bracket whilst my wife is well below it. We earn some income from property which we jointly own. Someone mentioned that I should be able to effectively allocate the full property investment income to her 100% rather than 50/50 as has been done in tax returns in the past. Does anyone know if this is possible?

Thanks!

le_loup

Only if the property is 100% in her name.
Think about it.

00ec25

Pythagorous wrote: »

Hi All,
I'm currently in the 40% tax bracket whilst my wife is well below it. We earn some income from property which we jointly own. Someone mentioned that I should be able to effectively allocate the full property investment income to her 100% rather than 50/50 as has been done in tax returns in the past. Does anyone know if this is possible?

Thanks!

in case Le Loup's response is too cryptic

not possible... a disadvantage of marriage for tax purposes is that where the property is jointly owned then the income must be split 50/50, no other option

the only way around this is to legally (ie. land registry) change the ownership to tenants in common with unequal portions favouring the lower rate taxpayer and then to submit a Form 17 (google it) to HMRC

Pythagorous

Exactly as I thought, I've been fed a load of nonsense that it isn't possible to apportion non 50/50 without legally changing the ownership %. Thanks 00ec25.

Pythagorous

le_loup wrote: »

Only if the property is 100% in her name.
Think about it.

The above isn't true. Think about it

CKhalvashi

Pythagorous wrote: »

Exactly as I thought, I've been fed a load of nonsense that it isn't possible to apportion non 50/50 without legally changing the ownership %. Thanks 00ec25.

Remember too, that if the wife is the 'managing agent' taking most of the profit (10-15% of gross rent is a fair split), then this may be a way around this.

If you're going to do this, ensure that she's registered with HMRC, and that you have contracts drawn up between you, so if (when) they come knocking, she is your agent, having rent paid into her business account (Limited company may be most tax efficient, and show serious intention to make a go of the business). The remainder of the rent is paid to you.

CK

le_loup

Pythagorous wrote: »

The above isn't true. Think about it

Glad you found it helpful.

anselld

Pythagorous wrote: »

Exactly as I thought, I've been fed a load of nonsense that it isn't possible to apportion non 50/50 without legally changing the ownership %. Thanks 00ec25.

Too many negatives in that! But to be clear what 00ec25 is saying, you *must* change %ownership in order to apportion anything other than 50/50

CLAPTON

le_loup wrote: »

Only if the property is 100% in her name.
Think about it.

not the only way

divorce and cohabiting would make it possible


(just trying to be helpful)

zygurat789

Pythagorous wrote: »

Hi All,
I'm currently in the 40% tax bracket whilst my wife is well below it. We earn some income from property which we jointly own. Someone mentioned that I should be able to effectively allocate the full property investment income to her 100% rather than 50/50 as has been done in tax returns in the past. Does anyone know if this is possible?

Thanks!

http://www.hmrc.gov.uk/manuals/pimmanual/pim1030.htm

See foot of page

This from HMRC suggests that it can be done quite legally.

00ec25

zygurat789 wrote: »

http://www.hmrc.gov.uk/manuals/pimmanual/pim1030.htm

See foot of page

This from HMRC suggests that it can be done quite legally.

The OP asked can he legally transfer (by implication: all of) the income to his wife, the answer is not unless he changes the legal ownership basis, with respect your post simply says in legalese what I've said above.

50/50 split is mandatory for jointly owning married couple ("Husbands and wives or civil partners living together should generally be treated as entitled in equal shares to income from jointly held property")

where it is not jointly owned ("this rule will not apply")

then they must sign a Form 17 ("if both husband and wife have signed a declaration") http://www.hmrc.gov.uk/forms/form17.pdf

which must relate to the legal share of each person ("but a declaration is only valid if their interests in the income and in the property itself correspond")

the rest of that page is irrelevant and confusing: It is virtually impossible to establish that a married couple with one property let out are operating as a partnership nor are they trading ("earned income")