changing beneficial ownership to share income

rodch · 14 November 2018 at 12:56AM

Hello everyone I have specific question, I will appreciate if anyone can shed some light on it.
I am retired and my primary income is from dividends that I receive from the shares that I own. My dividend income is more than 100K per year and my spouse who is also retired has much smaller income from other sources.
I want to find out if I can reduce my taxes by sharing my annual income but not the principal asset, as I want to control the ownership of those assets. I can add her name to my account and then sign Form 17 but I was told that I can create beneficial income trust where I assign certain part of income to her without adding her name on the account. Is it legal? I have looked at hmrc website but I can't find any mention of such 'income share' trust only. Could someone provide link or guidance on how to do that?
Thanks.Rod

antrobus · 14 November 2018 at 2:06AM

rodch wrote: »

Hello everyone I have specific question, I will appreciate if anyone can shed some light on it.
I am retired and my primary income is from dividends that I receive from the shares that I own. My dividend income is more than 100K per year and my spouse who is also retired has much smaller income from other sources.
I want to find out if I can reduce my taxes by sharing my annual income but not the principal asset, as I want to control the ownership of those assets. I can add her name to my account and then sign Form 17 but I was told that I can create beneficial income trust where I assign certain part of income to her without adding her name on the account. Is it legal? I have looked at hmrc website but I can't find any mention of such 'income share' trust only. Could someone provide link or guidance on how to do that?
Thanks.Rod

If you live with a spouse or civil partner and have income from property you jointly own, you’ll normally be taxed on an even split of the income between you.

Use this form if you want to change the split of income to your actual share of ownership.

You’ll also need to provide evidence that your beneficial interests in the property are unequal, for example a declaration or deed.

Declare beneficial interests in joint property and income
https://www.gov.uk/government/publications/income-tax-declaration-of-beneficial-interests-in-joint-property-and-income-17

I believe it's the case, that if you want to share the income, you have to share the asset.

00ec25 · 14 November 2018 at 10:05AM

as antrobus says above, you cannot retain the shares in your sole name and let her have the income from them. This is because you are married and therefore settlements legislation overrules to ensure that income splitting is not being done purely to reduce/avoid tax.

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg22020

"A couple cannot make a declaration where the split of beneficial ownership of the asset and of the income from it differ."

"..., if the disposal proceeds are retained by one spouse or civil partner it may be evidence that he or she was the sole beneficial owner of the asset which was disposed of"

rodch · 9 September 2019 at 9:25PM

I followed the advise given by antrobus and added my spouse to my account. I have follow up question, is there way for me to split whole year income between me and my spouse (50-50) or first part of my income will be mine only and I can only share tax income after I added her on my account?

00ec25 · 9 September 2019 at 9:58PM

your question has been answered in the post you appear to have ignored... #3

I suggested you read up on income splitting for married couples, she has to be entitled to the income. That means a deed if trust to make her a beneficial owner. She has no right to the income before the deed.

changing beneficial ownership to share income

Comments

Categories

Get our FREE Weekly email full of deals & guides - and it’s spam-free