Joint or single taxation

[Kelwyn]

Hello.
Im new to being a landlord.
my wife and I have inherited a 2 bed flat.
we have decided to keep it and let it out.

my wife has an occupational pension plus state pension so already pays tax at normal rate.
i retired early to look after my wife who has I’ll health, so no income of any sort.

im advised rental value of flat is approx 10k pa

can I designate myself as the “landlord” and declare income in my name only, therefore pay no tax? OR will the rental be deemed as joint income, therefore my wife would be taxed on 50% ?
the flat is jointly owned.

look forward to hearing from anyone that has advice.

thanks

[jpkeates]

There are two types of joint ownership.

One is a Joint Tenancy, which is usually the default for married couples.
In that form of ownership, you both own all of the property and, should one of you die, it simply remains the property of the other.

The other type of joint ownership is Tenants in Common, where you both own a specific share of the property, usually 50:50, which are legally separate, so you could in theory leave your half in a will to someone else (or your spouse).

In the Joint Tenancy, you would both be deemed to have half the income and expenditure for tax purposes.
It's not really possible for you to claim to be the landlord and your spouse not to receive any of the income - because that's obviously not the case.
Tax follows beneficial income, not the cash, so your wife would be considered to benefit from the income and be taxed on it.
It is theoretically possible to arrange your affairs so your income and your wife's are completely separate, but that is vastly complex and, unless you're both extremely and independently wealthy, not an option.

In the case of tenants in common, the income and costs are split in line with the proportions of ownership, and you can, in theory, vary the percentage of ownership for tax purposes with a trust arrangement so that, for example, the property was owned 99% by you and 1% by your wife, and the income and tax would be split accordingly.
There's a specific mechanism to confirm this to HMRC (called form 17), and the arrangement is both legal and quite common.

That needs a solicitor (technically it doesn't, but it does for most people in real life) and costs some money, so it's not worth it for some people, because the costs outweigh the saved tax.

[Kelwyn]

Many thanks for the detailed reply.

i intend to do it right from the word go, so your advice is of great help.

best regards

[Gordon999]

You & Mrs should register the property 50 : 50 under "Tenants in Common" at Land Registry.

And change the beneficial interest by DOT to 1% (Mrs) : 99 % ( You) and within 60 days, submit Form 17 to Tax Office . This will allow you to claim the rental income.