Pension & income from 50/50 ownership of dwelling.

Algarvian

No response from HMRC to a letter & tax advisors don't seem interested in small fry, so here goes:

We are UK retirees tax resident in Portugal.

Our tax affairs are basic, comprising pensions, rent & savings. However, we have 50/50 ownership of our dwelling & the rental is essential to our monthly income.

I pay UK tax on pensions above the minimum income threshold, but also on 50% of the rental income. My wife falls below the threshold currently with her share of the rent as sole income, apart from some savings interest.

We are considering registering the dwelling under sole ownership of my wife with a view to reducing my tax bill.

Anyone with experience of a similar situation, particularly regarding the tax implications for either of us on the actual change of ownership? I believe that transfer at Land Registry is fairly simple.

TheSpectator

First question is why are you paying UK tax on your UK income if you are non-resident. Are you not declaring the income in Portugal?

poseidon1

TheSpectator said:

First question is why are you paying UK tax on your UK income if you are non-resident. Are you not declaring the income in Portugal?

I thought the same, given that they are apparently Portuguese tax residence rather than UK. 

 However could be a case of a lack of clarity if  the rental property is actually in the UK, otherwise they appear to be avoiding their primary Portuguese tax obligations if its in Portugal.

Wilbur11

Can’t you just make your wife the sole landlord therefor the rental income is hers only and her tax liability.  I don’t think you need to change the ownership of the property to do for that.

Bostonerimus1

TheSpectator said:

First question is why are you paying UK tax on your UK income if you are non-resident. Are you not declaring the income in Portugal?

In the OP's circumstances income from immovable property and UK Government service pensions is taxable in the UK. UK SP and other income and pensions will be taxable in Portugal. So the OP's tax situation could be quite complex involving declaring and paying various amounts to both HMRC and the Portuguese tax authority.

DRS1

I seem to recall that there are (or were) special tax rules in Portugal for people from the UK (or elsewhere) who retired there and which meant you might not pay tax in Portugal on eg UK pensions.

Algarvian

Thanks for the comments. UK State & Local Govt pensions are taxable in UK even if non-resident. As is UK property rental. Portugal / UK have a treaty too, meaning that double taxation is avoided. 

Bostonerimus1

Algarvian said:

Thanks for the comments. UK State & Local Govt pensions are taxable in UK even if non-resident. As is UK property rental. Portugal / UK have a treaty too, meaning that double taxation is avoided. 

As with most treaties UK SP will be taxable where you are resident and NOT by the UK. Therefore, if you are tax resident in Portugal UK SP will be taxed in Portugal. UK Government service pensions will only be taxed in the UK.