BTL Rental Income - Make use of partners tax allowance in Scotland

paulferguson201

Hi Everyone,

Me and my wife currently own a BTL property in Scotland, I'm a higher rate tax payer and my wife does not work (so she has her full tax allowance available).

At the moment, we pay income tax on the rental profit on a 50/50 split basis (as per the HMRC rules I believe), So I pay 41% tax on my half of the rental income while my wife pays 0% on her half.

Is there a way we can change this so that we make use of her tax free allowance? (e.g. so she receives all or most of the rental profit)

My understanding is that in England & Wales you can create a Declaration of Trust and assign your partner the beneficial ownership (along with completing HMRC Form 17).  So in England & Wales both of our names would be on the title deeds but the DoT would specify she has 99% beneficial ownership while I have 1%, and we would pay tax on that split.

However it looks like DoT is not a concept in Scottish property law (confirmed by a couple of solicitors that I emailed), so this would not work.

Does anyone know how we would approach something similar in Scotland? (e.g. make use of my wife's tax allowance)