Saving tax on a rental income

HelenLou

Hi , My husband lets a property that is in his name and gets 5000 PA income from it. I am reducing my working hours in the Autumn and will be only earning 5500 per annum . Can the rent be paid to me rather than my husband so as to save paying the income tax on it. Thank you

antrobus

HelenLou wrote: »

Hi , My husband lets a property that is in his name and gets 5000 PA income from it. I am reducing my working hours in the Autumn and will be only earning 5500 per annum . Can the rent be paid to me rather than my husband so as to save paying the income tax on it. Thank you

It's the ownership of the property that drives who gets taxed on the income.

Pennywise

HelenLou wrote: »

Can the rent be paid to me rather than my husband so as to save paying the income tax on it. Thank you

Yes, if he transfers the legal ownership of it to you.

xylophone

https://www.taxinsider.co.uk/681-How_to_Correctly_Gift_Property_to_Spouses.html

may be worth a look.

if he transfers the legal ownership of it to you.

Beneficial ownership.

"When spouses and civil partners transfer assets between them, the transfer must be an outright gift with no conditions attached to it. The transferring spouse or civil partner must not continue to control the asset or derive a benefit from it after the transfer, otherwise it will fall foul of the ‘settlements’ anti-avoidance provisions."

Discodave

the person that owns the property needs to pay any tax due, after expenses - ie: net profit. if you both own the house, then income/net profit must be split 50/50

Savvy_Sue

Discodave wrote: »

the person that owns the property needs to pay any tax due, after expenses - ie: net profit. if you both own the house, then income/net profit must be split 50/50

I thought that with a married couple you could split the income unevenly if the actual ownership was unequal.

Useful thread here.

Discodave

Savvy_Sue wrote: »

I thought that with a married couple you could split the income unevenly if the actual ownership was unequal.

Useful thread here.

Not AFAIK - any jointly owned property needs to be split 50/50, unless, lets say for example, your parnter only owns 25% of the house and you own the other 75%.. Then you may have a case, but like previously, you'd need to prove that was the case.

booksurr

Discodave wrote: »

Not AFAIK - any jointly owned property needs to be split 50/50, unless, lets say for example, your parnter only owns 25% of the house and you own the other 75%.. Then you may have a case, but like previously, you'd need to prove that was the case.

you are correct that a property owned by a married couple as Joint Tenants must be split 50/50 - there is no other option.

However if they own as Tenants in Common they can do a Deed of Trust to establish differential beneficial ownership and then they send the Deed along with a Form 17 to HMRC after which point the income can be split according to the Deed share

lots of info out there on how this works