Property Income on Tax Return

LukeSkywalker007

I used to equally distribute the income of our UK property between me and my wife. But this year I realised i would avoid 300 GBP if the income is declared just from my wife's account. Would changing the way I declare cause a problem?

anselld

As booksurr has stated, also noting that if you are doing your 2014-15 tax return you cannot change ownership retrospectivly so you are stuck with a 50:50 split as implied by the ownership at the time.

fcjf

Hi,

Can you use the Form 17 to change ownership proportions if the only reason is for tax avoidance?

anselld

fcjf wrote: »

Hi,

Can you use the Form 17 to change ownership proportions if the only reason is for tax avoidance?

No, Form 17 does not change ownership proportions. You can only use it to elect for taxation in line with beneficial ownership. You first have to change beneficial ownership to the required percentages by owning as Tenants in Common and using Deed of Trust to define actual percentage ownership. *Then* you can use Form 17.

ie...
Form 17 declaration must reflect reality ...
http://www.hmrc.gov.uk/manuals/tsemmanual/tsem9850.htm

So to avoid tax you must first change reality!

fcjf

Thanks for the reply and just to ensure I have this correct;

I get my solicitor to change the current 50:50 split between myself and my wife as tenants in common to something more weighted in favour of my wife and then complete the Form 17 to align the taxation with the percentages stated on the deed of trust?

If this is correct can HMRC still ask about the reason for changing the ownership percentages of the properties and expect a robust auditable response? I can justify it in some respects in that my wife's self-employment is changing and her profits from her business will be reducing so changing the % of rental property income will replace the lost profits…or is this all irrelevant once the tenants in common percentages are legally changed?

booksurr

fcjf wrote: »

or is this all irrelevant once the tenants in common percentages are legally changed?

correct, it is irrelevant why you changed

fcjf

Just another question sorry, when the solicitor is changing the deed of trust do they need to inform the mortgage lender and or freeholder in the case of a leasehold property?

anselld

fcjf wrote: »

Just another question sorry, when the solicitor is changing the deed of trust do they need to inform the mortgage lender and or freeholder in the case of a leasehold property?

No, not necessary.