Tenants in Common 99:1 - Self Assessment

ianpalmer2007

I have changed a flat we own to 99:1 in favour of my wife at The Land Registry with all the correct forms - as she does not use all her income tax allowance - this year she will earn circa £8k - next year onwards she will have no income / pensions at all for 9 years until retirement age.

Previously I included the details of the rental income on my return. Do I now apply for a Self Assessment Number for my wife - is that just a phone call?

Then put 99% of the income details on her return and 1% on mine?

I just thought HMRC might look at my return and think "how come that has gone down from 100% to 1%.

booksurr

as you are married the process is a Form 17 supported by a declaration/deed of trust depending on what you used when you did the TIC %
https://www.gov.uk/government/publications/income-tax-declaration-of-beneficial-interests-in-joint-property-and-income-17

anselld

... and you cannot change the income split retrospectively. The change takes effect from the Form 17 signature date, not from the Land Registry date.

ianpalmer2007

So the fact that we registered the change at the Land Registry last February doesn't mean it is from that date?

Do I complete the Form 17 in my name or tdo it with/for my wife?
Once submitted will they issue her with a self assessment?

Many thanks

anselld

ianpalmer2007 wrote: »

So the fact that we registered the change at the Land Registry last February doesn't mean it is from that date?

No. The default split for married couples is 50:50 until you elect to split in line with actual ownership using Form 17.

ianpalmer2007 wrote: »

Do I complete the Form 17 in my name or tdo it with/for my wife?
Once submitted will they issue her with a self assessment?

Many thanks

Form 17 is signed both joint owners. I would complete it and then write to HMRC enclosing the form and requesting that your wife completes self assessment in future.

ianpalmer2007

Thank you - so can I split the income on a 50/50 basis for this current tax year (April 6th 2016 to Jan 31st 2017) and register the form today for 99:1 split in favour of my wife for THE REMAINDER of this tax year - as well sending the covering letter that you referred to - or does it have to be "approved" before I can change the percentages. It would suit me to date the Form 17 as 31st Dec 2016 with the new 99:1 split for the final 3 months - could I try that?

Many thanks indeed for your advice

anselld

ianpalmer2007 wrote: »

Thank you - so can I split the income on a 50/50 basis for this current tax year (April 6th 2016 to Jan 31st 2017) and register the form today for 99:1 split in favour of my wife for THE REMAINDER of this tax year - as well sending the covering letter that you referred to - or does it have to be "approved" before I can change the percentages. It would suit me to date the Form 17 as 31st Dec 2016 with the new 99:1 split for the final 3 months - could I try that?

Many thanks indeed for your advice

Yes. Form 17 must be submitted within 60 days of signing so you can sign and date it on 31 Dec 2016 then submit. No need to wait for acknowledgement but keep copy and proof of posting just in case.

ianpalmer2007

OK – I think I have messed up by not submitting the Form 17 after we added my wife to the deeds at the Land Registry in Feb 2016 – so can I just outline my position and try to achieve a simple solution?

As I had moved in to my wife’s home - I rented out my flat that I wholly owned - from 2011 onwards and I completed a Self Assessment each year and paid the full amount of tax.

My wife was going to stop working this year (2016/17) so we wanted to use her allowance against the flat – I am retired and receive £15k of state and private pensions – so pay tax on the extra rental income.

I was advised to complete a TR1 and AP1 and enter in box 10 of the TR1 – “To be held as tenants in common on the basis of 99:1 in favour of ...................” which we did and we have got a copy of the “Completion of Registration” from the Land Registry (although it doesn’t mention the 99:1)

But I did not send in the FORM 17 as I thought I could do it when I was ready to do the Self Assessment for both of us for this current year.

My wife has actually worked some of this year and will earn £8,000 – but will not work next year.

Could I now apply for her to be sent a Self Assessment for 2016/17 and enter 50% of the rental income (£1900) and register to have £1000 of her unused allowance transferred to me (total £10,900)?

Then, in April 2017 complete a formal Deed of Trust and post a copy with Form 17 to HMRC and then enter 99% of the rental income on her 2017/18 Self Assessment to maximise her allowances?

martindow

ianpalmer2007 wrote: »

this current tax year (April 6th 2016 to Jan 31st 2017)

The tax year ends 5th April 2017. 31st December is the deadline for filing the return and making the payment.

ianpalmer2007

martindow wrote: »

The tax year ends 5th April 2017. 31st December is the deadline for filing the return and making the payment.

No sorry that meant a partial year (9 months) at 50% each and then the final 3 months at 99:1 by sending in the Form 17 now - but I have since decided that is too "messy" and best to treat current year as 50:50.

I submitted and paid my tax for 2015/16 in May 2016 so now trying to plan for 2016/17 and getting the benefit of using the "unused" allowances of my wife.

booksurr

ianpalmer2007 wrote: »

OK – I think I have messed up by not submitting the Form 17 after we added my wife to the deeds at the Land Registry in Feb 2016 so that was in 15/16 tax year – so can I just outline my position and try to achieve a simple solution?

As I had moved in to my wife’s home - I rented out my flat that I wholly owned - from 2011 onwards and I completed a Self Assessment each year and paid the full amount of tax.

My wife was going to stop working this year (2016/17) so we wanted to use her allowance against the flat – I am retired and receive £15k of state and private pensions – so pay tax on the extra rental income.

I was advised to complete a TR1 and AP1 and enter in box 10 of the TR1 – “To be held as tenants in common on the basis of 99:1 in favour of ...................” which we did and we have got a copy of the “Completion of Registration” from the Land Registry (although it doesn’t mention the 99:1)

But I did not send in the FORM 17 as I thought I could do it when I was ready to do the Self Assessment for both of us for this current year.

My wife has actually worked some of this year and will earn £8,000 – but will not work next year.

Could I now apply for her to be sent a Self Assessment for 2016/17 she is late registering as she was liable in 15/16 and enter 50% of the rental income (£1900) and register to have £1000 of her unused allowance transferred to me (total £10,900)? the transfer is 10% or nothing so £1,100

Then, in April 2017 complete a formal Deed of Trust and post a copy with Form 17 to HMRC why wait until April? and then enter 99% of the rental income on her 2017/18 Self Assessment to maximise her allowances?

1. Tax year 15/16 was 6th April 15 - 5th April 16 therefore your wife became entitled (liable) to 50% of the profit for the period "Feb 16" - 5 April 16 and she should have declared that on her tax return that was due 2 days ago on 31 Jan 2017

2. She must register for her own self assessment asap and certainly before 31 Oct 17 which is the deadline to register for SA in respect of 16/17 tax year

3. You can either declare the incorrect 15/16 tax position of both of you or hope it won't get noticed. Presumably as both of you were then basic rate taxpayers there is no net tax difference so it does not matter to the Govt in monetary terms

4. As you say transferring her allowance to you would make sense for 16/17 - however, as it appears you manage her tax affairs for her, take care that it is "your wife" who is applying to have her allowance transferred to you. You cannot apply for it to be transferred to you. The personal allowance for 16/17 is £11,000 so the transfer will be £1,100, not the £1,000 you mention. She cannot move any more or any less than the full £1,100
https://www.gov.uk/marriage-allowance/how-it-works

5. Complete the form 17 and ensure HMRC receive it within 60 days of the date you both signed it so that the effective date for the income split becomes the signature date. Why wait until April 17? You could date it 1st January 2017 and still get it to HMRC within 60 days of that date, or date it for the date the rent gets paid by your tenants so you do not have to apportion the amount between you and her in the month of the re-allocation. Submit the declaration of trust (don't date it after the Form 17 date!) and ensure that you have completed the form to meet the checks HMRC perform on it - read these:
https://www.gov.uk/hmrc-internal-manuals/trusts-settlements-and-estates-manual/tsem9860

https://www.gov.uk/hmrc-internal-manuals/trusts-settlements-and-estates-manual/tsem9870

6. for 17/18 "your wife" will have to cancel the transfer of her allowance
https://www.gov.uk/marriage-allowance/if-your-circumstances-change