Furnished Holiday Let - Income allocation

Jon_Henley

My wife and I own a FHL and I understand that as a qualifying FHL we are able to apportion income between us for tax purposes as we see fit in order to utilise lower tax rate allowances before higher on a pooled basis as far as FHL income is concerned. We have two children (under 18) which we could add as minority property owners (via a trust due to age of children), if we were to do this, could we allocate a portion of property income to them in order to utilise their tax allowances and allow them to build savings?

Sibbers123

No, this would be considered a parental settlement and even if the children owned the property, the income would be taxed on you.

Not to mention the CGT and SDLT on transfer to the children.

With FHLs, you and your wife can split the income on a just and reasonable basis in line with the respective effort you both put into managing the FHL.

Jon_Henley

Thanks for the guidance.