Hi Forum, Please be gentle on a new member and first time poster.
Hopefully, someone will be able to assist me in an area I realise has been covered numerous times. Currently, I have trawled the internet, spoke with my Accountant and Solicitor, to say I have received conflicting information would be an understatement.
Obviously I am trying to plan my Tax liabilities in the most efficient manner.
I will try and keep my query concise and provide as much information as possible. So here goes:
I am married and have 4 rental properties. The properties are owned 50/50 with my wife and were purchased as ' Joint Tenants'. There are no mortgages on any of the properties and they are owned outright by ourselves.
I undertake all of the lettings and together we are classed as the Landlord on the Tenancy Agreements.
I am a 40% taxpayer (full time job). My wife is 20% (full time job)
Here is the dilemma....
This year, 2018/19, my earnings have taken me way past the 60% tax bracket. (100k-123K). Therefore to mitigate this, I have paid a large amount into my pension to bring my 'adjusted earnings' back under £100K. The contribution into my pension is in excess of £55K (I have 3 years carry forward to enable me to still be under the 40K limit).
My wife earns £40K, so this year she will have £10K before she becomes a 40% tax payer. For the coming year, I do not want to have to pay a similar amount into MY pension. Rental income is £25K, so this will push my wife into 40% for the coming year. (40K + 12,500) with her current pension contributions this will bring her back down to 20% tax.
What I would like to do, is alter the proportion of rental income we receive to make my wife receive the majority. (probably 95/5 ish...) That way, if she receives £24K we can make additional pension contributions in her name to benefit from the 40% relief from HMRC.
I am always going to be in 40% tax (I accept that tax is due). What I need to do is avoid the £100K - £123K bracket. Therefore I am happy to make Pension contributions. However, I will be unable to sustain the £55K contributions, as all of my carry forward allowance will be used up. I need to transfer some earnings over to the wife to use up her £40K allowance.
My thoughts are:
1. Change ownership from 'Joint Tenants' to 'Tenants in Common'
2. Submit Form 17 to change the beneficial interest of the properties. (by way of gifting to my wife)
3. Submit SA as normal but Wife will receive more rental income.
4. Wife to make Pension AVC's to bring her tax bracket back down to 20%
Then, before we sell. Submit another Form 17 to put the beneficial interest back to 50/50 to enable us to both benefit from our Capital Gains allowance. Would there be a minimum time to do this?
I don't think there would be any Stamp Duty liability?
Thoughts???
My accountant is reluctant to undertake this and is steering me away. However, doing some research it seems to be a 'legitimate' way to get your Tax affairs in order.
thanks in advance.
Hopefully, someone will be able to assist me in an area I realise has been covered numerous times. Currently, I have trawled the internet, spoke with my Accountant and Solicitor, to say I have received conflicting information would be an understatement.
Obviously I am trying to plan my Tax liabilities in the most efficient manner.
I will try and keep my query concise and provide as much information as possible. So here goes:
I am married and have 4 rental properties. The properties are owned 50/50 with my wife and were purchased as ' Joint Tenants'. There are no mortgages on any of the properties and they are owned outright by ourselves.
I undertake all of the lettings and together we are classed as the Landlord on the Tenancy Agreements.
I am a 40% taxpayer (full time job). My wife is 20% (full time job)
Here is the dilemma....
This year, 2018/19, my earnings have taken me way past the 60% tax bracket. (100k-123K). Therefore to mitigate this, I have paid a large amount into my pension to bring my 'adjusted earnings' back under £100K. The contribution into my pension is in excess of £55K (I have 3 years carry forward to enable me to still be under the 40K limit).
My wife earns £40K, so this year she will have £10K before she becomes a 40% tax payer. For the coming year, I do not want to have to pay a similar amount into MY pension. Rental income is £25K, so this will push my wife into 40% for the coming year. (40K + 12,500) with her current pension contributions this will bring her back down to 20% tax.
What I would like to do, is alter the proportion of rental income we receive to make my wife receive the majority. (probably 95/5 ish...) That way, if she receives £24K we can make additional pension contributions in her name to benefit from the 40% relief from HMRC.
I am always going to be in 40% tax (I accept that tax is due). What I need to do is avoid the £100K - £123K bracket. Therefore I am happy to make Pension contributions. However, I will be unable to sustain the £55K contributions, as all of my carry forward allowance will be used up. I need to transfer some earnings over to the wife to use up her £40K allowance.
My thoughts are:
1. Change ownership from 'Joint Tenants' to 'Tenants in Common'
2. Submit Form 17 to change the beneficial interest of the properties. (by way of gifting to my wife)
3. Submit SA as normal but Wife will receive more rental income.
4. Wife to make Pension AVC's to bring her tax bracket back down to 20%
Then, before we sell. Submit another Form 17 to put the beneficial interest back to 50/50 to enable us to both benefit from our Capital Gains allowance. Would there be a minimum time to do this?
I don't think there would be any Stamp Duty liability?
Thoughts???
My accountant is reluctant to undertake this and is steering me away. However, doing some research it seems to be a 'legitimate' way to get your Tax affairs in order.
thanks in advance.
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