Property Tax

[dhoops97]

Hi all,

My father owns a handful of properties which he earns roughly £35,000 a year from rental income. He wants to be more hands off and has decided to make my brother and I the new landlords, by amending the tenancy agreements. The rental income would be paid into a joint account owned by my brother and I and we would pay my dad a fixed fee every month and then keep the remainder.
My question is, how will HMRC view this?... I assume that we'd have to pay HMRC instead of my dad, as we are receiving the income. In addition, I'm nearly a 40% tax earner and my brother is at university. Am I aloud to split the income in a tax efficient way, so that my brother claims the majority of the income.

Your help is appreciated!

Regards

[jpkeates]

It might actually be more sensible for all three of you to be the joint landlord.

You can decide how you wish to split the income between you and write to HMRC to confirm how you plan to split the income and from what date.
That is true if you are all three the landlord or just the two brothers.

[dhoops97]

Thank you for your reply! I think my dad wants to be completely hands off, so it will just be my brother and I who are the landlords. As we are both the landlords and not the legal owners of the property, can we simply write to HMRC, informing them of how we plan to split the profits. My intention would be that my brother would receive all of the income, as he's at university, that way we can stick within the 20% tax bracket.

Regards

[Kape65]

Is it really that easy to just gift somebody else the income?

[jpkeates]

Thank you for your reply! I think my dad wants to be completely hands off, so it will just be my brother and I who are the landlords.

You're possibly going to spend a lot of time explaining that arrangement,
It's not normal for a property owner to simply hand over their property to someone else (even a family member) to let out.

And schemes that are simply designed, as this one is, to minimise the tax take or to shift the income from one person to another are not something that HMRC are neutral about.

As we are both the landlords and not the legal owners of the property, can we simply write to HMRC, informing them of how we plan to split the profits. My intention would be that my brother would receive all of the income, as he's at university, that way we can stick within the 20% tax bracket.

You have to split the income if you're both landlords, so the maximum is probably 99:1%.

If you want your brother to have all of the income, he could be the sole landllord.

I'm more than happy to answer specific questions, but I would suggest that this whole arrangement could probably be set up more effectively than the fairly informal arrangement that you have outlined.
Better to investigate and plan properly before you do anything than to try and fix it later.

And there are inheritance tax and CGT opportunities that may make it sensible to transfer some or all of the property to you.
Speak to a family solicitor or an accountant.

[Echoes]

This is an interesting topic. I want to split btween me and my partner. Do I just need to write a letter to hmrc or any formal form that I need to fill in and send it? What is the legal procedure to do it? I am curious to know so I can take an informed decision. Thanks

[jpkeates]

Are you married to your partner or in an equivalent relationship?

[Echoes]

Married partners. We have one of our proeprty is 'tenant in common' and written on land registry - split into 90:10% between two of us. Do we still need to fill in Form17 and let the HMRC know? Do we have to consult the solicitor to follow the procedure? Its the recent purchase though.

[jpkeates]

You normally have a limited amount of time to use form 17, and my guess is that time period has elapsed.
So yes, I'd talk to a solicitor.

[Gordon999]

Yes , you can send in a Form 17 which must reach the tax office withing 60 days of signing date .

https://www.gov.uk/government/public...-and-income-17