Income tax on joint rental income

bluebug

My partner and I bought an investment property last year. Currently we make approx £450 pm in profit (rental income less mortgage interest repayment). We are both in full time employment, however I am on the higher tax bracket whereas my partner is on 20%.

For our tax return, would it be possible for me to transfer all of the rental profit to my partner so that he is only taxed at 20% (even with the rental income he will still be in 20% bracket) or do we have to split this out 50:50 and taxed at our tax rates?:rotfl:

Pennywise

The rental income split doesn't have to be 50:50, but HMRC will expect the taxable amount to be the same as the way in which the rent is paid. So if you want your partner to be taxed on more than 50%, s/he has to receive more than 50%. If all the rental income was paid to them, and evidenced as such in the lease etc., then they would be taxed on the full 100% and you on none, but if the money somehow found its way back to you, you'd face being taxed on it again. Best to speak to a solicitor to get the ownership documents corrected so that there is no doubt as to who gets the rent and also at the same time, do likewise to make sure it is clear who gets what share when it is eventually sold - all fairly easy to do, but just important to get the formalities right.