Declaration of Trust re rental income for married couple

GreenGorilla101

My wife and I own a rental property with a nominal income.  Not a lot, but sufficient that it needs declaring via self assessment.  It is subject to a mortgage

To date we've been splitting the income 50/50 and so too the relevant tax liabilities.

I've recently moved into the high rate tax bracket which has bumped up my tax liabilities.

I want to complete a Declaration of Trust to re-apportion the beneficial interest to 99/1 in favour of my wife (a 20% tax payer), and I am am aware it needs submitting to HMRC.

However, I have 2 queries:
1.  it is necessary to update the Land Registry?  We're both named owners and named on the mortgage, but the title has us as Joint Tenants.  My reading suggests this is recommended but is not a legal requirement.  Frankly I want to avoid the hassle of TR1s etc

2.  I've come across the HMRC note TSEM4015
www.gov.uk/hmrc-internal-manuals/trusts-settlements-and-estates-manual/tsem4015  

Intended to prevent an individual from gaining a tax advantage by making arrangements which divert their income to another person who is liable at a lower rate of tax or is not liable to income tax.

I would suspect many people have re-apportioned beneficial interests in property to avoid tax 
Any view on this?

Thanks

mybestattempt

GreenGorilla101 said:

My wife and I own a rental property with a nominal income.  Not a lot, but sufficient that it needs declaring via self assessment.  It is subject to a mortgage

To date we've been splitting the income 50/50 and so too the relevant tax liabilities.

I've recently moved into the high rate tax bracket which has bumped up my tax liabilities.

I want to complete a Declaration of Trust to re-apportion the beneficial interest to 99/1 in favour of my wife (a 20% tax payer), and I am am aware it needs submitting to HMRC.

However, I have 2 queries:
1.  it is necessary to update the Land Registry?  We're both named owners and named on the mortgage, but the title has us as Joint Tenants.  My reading suggests this is recommended but is not a legal requirement.  Frankly I want to avoid the hassle of TR1s etc

2.  I've come across the HMRC note TSEM4015
www.gov.uk/hmrc-internal-manuals/trusts-settlements-and-estates-manual/tsem4015  

Intended to prevent an individual from gaining a tax advantage by making arrangements which divert their income to another person who is liable at a lower rate of tax or is not liable to income tax.

I would suspect many people have re-apportioned beneficial interests in property to avoid tax 
Any view on this?

Thanks

1. My understanding is that a joint tenancy would need to be severed before a declaration of unequal shares of beneficial ownership in the property can be made:

https://www.gov.uk/hmrc-internal-manuals/trusts-settlements-and-estates-manual/tsem9850

This link explains the process for severing a joint tenancy which inevitably involves submitting forms to the Land Registry:

https://www.gov.uk/joint-property-ownership

 
2. Income follows beneficial ownership so the property income is declared on the respective tax returns in the same split as in the declaration of unequal shares of beneficial ownership. There is no diversion of income so it is not caught by the settlements legislation.
 

sheramber

https://www.tax.service.gov.uk/print-and-post/form/SpecPersTax_iForms/1.0/17/17.xdp