Completing Tax Return for Rental Income

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    Completing Tax Return for Rental Income

    I have just purchased a property in joint names with my husband and have now rented it out. As my husband is a 40% tax payer, can I claim all of the rental income solely against my tax return as I am a 20% tax payer ? Thanks

    #2
    No. As you are joint owners then HMRC's default position is you declare the rental profit 50/50. However you can use a robust Declaration of Trust to define the Beneficial Ownership from 1% to 99% You then need to submit a Form 17 to HMRC. Best use a solicitor for both the DofT and to complete and submit the Form 17. Regards Peter

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      #3
      No, as joint owners you are each entitled to half the rental income (less half the costs), so each of you will have to pay tax on the income.

      The only ways I'm aware of to avoiding paying 40% tax in this situation are:

      1) Transfer the property to your name entirely.
      2) Transfer the property to a Ltd. Company and where you own all the shares (so effectively own the property entirely).
      3) Transfer the property to a Ltd. Company (with each of you holding equal shares) and don't pay dividends or a salary to either of you until your husband is back to paying 20% tax. The company can make pension contributions to your personal pensions at any time without any personal tax or corporation tax being due. (And you can withdraw 25% of the money tax-free when you retire).

      I'm not familiar with the Trust method posted above.

      BTW: I'm in a similar situation and will just pay the 40% Tax. It's sometimes better not to let the Tax 'tail' wag the dog!

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        #4
        tlangdon12

        1) That would obviously achieve the desired effect but as they've just bought it in joint names it seems to be uninventing the wheel and inventing new one.
        2) A bad idea (probably).
        3) Another bad idea (probably).

        OP: do as Pete suggests.

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