Landlord income Tax? -who's responsibe for paying the income tax?

00ec25

awpvicki wrote: »

Sorry, I was being too basic with my explanation, but I am sure you know what I was getting at. I still don't think my statement was 'wrong' as such, just perhaps not as in-depth as yours. Thank you for clarifying.

sorry but I don't know what you were getting at, tax liability for property related income can be very complex. I have already given the most simple example of married couples, there is also the much more complex case of beneficial versus legal ownership as determinant of whose income it is

I would welcome your further clarification of what you meant as I really don't know to what you are referring

00ec25

happycamel wrote: »

The owner of the asset is the one liable for the tax, .

not in the case of legal versus beneficial ownership

martindow

00ec25 wrote: »

that statement we can say with certainty is wrong

take the case of a married couple letting their old home. The wife may be a non taxpayer so wants all the income in her name but the husband is a joint (or sole) owner of the property then the income is (at least) in part the husbands, so it absolutely does not follow the tax liability is with the recipient of the money - which is what you incorrectly imply

Is this correct? I thought that HMRC consider that income is received according to the ownership of the house. A couple owning the house will normally be 50:50. If the husband is the sole owner, I thought he would be liable for all the tax liability.

lavalamp

00ec25 wrote: »

sorry but I don't know what you were getting at, tax liability for property related income can be very complex. I have already given the most simple example of married couples, there is also the much more complex case of beneficial versus legal ownership as determinant of whose income it is

I would welcome your further clarification of what you meant as I really don't know to what you are referring

I just answered for the purposes of the OP who has not explained the situation fully. What I was saying was that whoever is receiving the money should be paying the tax. Whether that be themselves, their partner or their business. I know that tax issues are complicated, I just didn't want to complicate things for the OP until we knew the situation better. I will step out of the conversation now because I obviously know too little about tax issues to make valuable comment.

00ec25

martindow wrote: »

Is this correct? I thought that HMRC consider that income is received according to the ownership of the house. A couple owning the house will normally be 50:50. If the husband is the sole owner, I thought he would be liable for all the tax liability.

a couple will not "normally" be joint ownership, they could equally easily be TIC

you are correct in saying if sole ownership then the liability rests with that owner (unless there is a beneficial interest that overrides it)

legal ownership - 2 options:
1. Joint Tenancy: for a married couple then the income must be split 50/50 by law. For non married owners the income does not need to be split 50/50 even though the legal ownership is still 50/50

2. Tenants in Common : for a married couple income can be split exactly as per the respective ownership share provided moreover that the couple must each complete a Form 17 declaration otherwise HMRC will ignore the split and default it to 50/50. Where Form 17 is registered then the split will be whatever the share is. Again for non married owners share can be whatever they want and a Form 17 is not required

beneficial ownership
http://www.hmrc.gov.uk/manuals/tsemmanual/tsem9010.htm
the following is a horribly abridged and simplified explanation - it would wise to properly consult on this before trying to use beneficial ownership when it comes to paying tax:
beneficial ownership may be evidenced as a declaration of trust and therefore allocates, for example, income from property to someone who is not the legal owner. A declaration of trust cannot be used by married couples to favour one of them - married couples are taxed as above http://www.hmrc.gov.uk/manuals/tsemmanual/tsem9850.htm