Decreasing tax liability

[Kate foster]

Hello all,
I am in a situation where my tax liability will change in jan and I will be 20 K access of 20% tax bracket and fall into 40%. My husband is in 20% bracket and earns around 11 K. Please can you let me know if there is a way to transfer income to my husband form BTL rental income. How do I go about it and how much can it cost. I have 4 BTL properties. Thank you. Kate

[jpkeates]

The only way (that isn't quite complicated) to share the income is if you are joint owners of the property in some way.
And it isn't simply a paperwork transaction, the ownership would be real.
So, the first question is, do you both own any of the properties and if no, are you prepared to give up some of the ownership?

If there are any mortgages on the properties that can complicate things significantly.

[AndrewDod]

Transfer all four into his name. If you think that might end badly, then don't do that.

As said if there are mortgages that is a problem.

[Kate foster]

jpkeates yes we own all properties jointly. I am happy to give my part of ownership to my hubby. But we do have mortgages on 3 of the properties out of 4 whose rent is the lowest of all.

[AndrewDod]

I'm not sure how to follow up here given that my first comment is still held in the dreaded "unapproved"

[jpkeates]

jpkeates yes we own all properties jointly. I am happy to give my part of ownership to my hubby. But we do have mortgages on 3 of the properties out of 4 whose rent is the lowest of all.

If the properties are owned jointly (and I'm assuming that you are joint tenants - rather than tenants in common), you should almost certainly already be splitting the income (and expenditure for tax purposes) in half.

To change that, to shift a greater proportion to your husband, you would have to change the ownership to be tenants in common - so you both own a defined share of the property. Your mortgage lender is likely to prohibit that, which makes the process impossible.

If they don't (and for the property that isn't mortgaged), once that's done, you can use a trust deed to assign ownership of the property as you wish. So, possibly, 99:1 in favour of your husband. There's a special mechanism (form 17) to notify HMRC of the change.

That's a standard process that most solicitors will handle routinely.
You can change the proportions when it suite you (for disposal for example).

There are issues with the process - ownership is really transferred, and it affects what happens if either of you die, and more immediately if you divorce.