Tax on Rental Income - Joint Ownership

Bulwark

Hello, my Civil Partner and I each own 50% of a property and split the rental income between us. I am a Higher Rate tax payer and he is on Standard Rate. We have a joint bank account, is it acceptable tax wise, for me to reduce my part of the rental income by the total amount of the overheads/expenses or do we have to to split  this between us on are Tax Returns?    

Dazed_and_C0nfused

Bulwark said:

Hello, my Civil Partner and I each own 50% of a property and split the rental income between us. I am a Higher Rate tax payer and he is on Standard Rate. We have a joint bank account, is it acceptable tax wise, for me to reduce my part of the rental income by the total amount of the overheads/expenses or do we have to to split  this between us on are Tax Returns?    

Not unilaterally no.  But you may have some more formal options.

No doubt regulars more versed in this subject will be along to explain shortly.

Bulwark

Just some more information, we arranged for our Solicitor to change the Land Registry Ownership to both our names but the Management Charges, Estate Agents Fees etc are still in my name only.. 

mybestattempt

Bulwark said:

Hello, my Civil Partner and I each own 50% of a property and split the rental income between us. I am a Higher Rate tax payer and he is on Standard Rate. We have a joint bank account, is it acceptable tax wise, for me to reduce my part of the rental income by the total amount of the overheads/expenses or do we have to to split  this between us on are Tax Returns?    

The expenses should be deducted from the gross rents to arrive at  taxable property income which is then split 50/50 between you.


If you want to the split to be different, so more of the joint income is assessed at basic rate, then these extracts from the HMRC guidance explain how to achieve this:


https://www.gov.uk/hmrc-internal-manuals/trusts-settlements-and-estates-manual/tsem9812

https://www.gov.uk/hmrc-internal-manuals/trusts-settlements-and-estates-manual/tsem9842

Bulwark

Thank you for the guidance. As I understand it, we  have to first take the overheads/expenses off the rent received  and then split the resulting income 50/50. It will not be applicable to deduct all  the expenses from just  one of the two income streams.  

mybestattempt

Bulwark said:

Thank you for the guidance. As I understand it, we  have to first take the overheads/expenses off the rent received  and then split the resulting income 50/50. It will not be applicable to deduct all  the expenses from just  one of the two income streams.  

That's correct.

colalba

An alternative to deducting expenses is to use the £1000 property allowance. Both of you have a £1k allowance.  You can pick the option that is most advantageous to you each year. 

  Tax-free allowances on property and trading income - GOV.UK