Assigning rental income to spouse

ses6jwg

Hi all.

I have one BTL property with a small mortgage 

The mortgage and property are in my sole name and was purchased in 2015.

I got married in 2018. Myself and my wife bought another property and I let out my old one on consent to let with mortgage provider. 

I have been filing self assessment and paying tax in my own name.

With my new job and the freezing of the income tax thresholds there is a danger I may push slightly into the higher rate tax bracket.

Is there a way of assigning the rental income to my wife so that it's classed as her income without adding her to the property? She is a basic rate taxpayer and well under the threshold for higher rate.

Alternatively, if I add her to the property as a joint owner will we have to pay SDLT again she will then own a second home? We have already paid it once. We are in Wales.

Many thanks

Jeremy535897

If you only assign the income from the property to your wife, that income remains assessable on you under the settlements legislation. See:
https://www.gov.uk/government/publications/trusts-and-settlements-income-treated-as-the-settlors-hs270-self-assessment-helpsheet/hs270-trusts-and-settlements-income-treated-as-the-settlors-2021

Husband and wife living together are treated as one for higher rate SDLT, and this applies to LTT in Wales also:
https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09820
https://gov.wales/higher-rates-land-transaction-tax-guide

I know nothing about Welsh LTT, but if it is like SDLT, then any transfer between you and your wife will be treated as a transaction for the value of the part of the mortgage she assumes, but higher rate SDLT would not apply.

sheramber

You may need need to contact your lender before making her a joint owner.