Tax thresholds

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    Tax thresholds

    My first post so please be gentle!

    I am a 40% tax payer and my spouse is a 20% tax payer. If we were to let a second property, I am assuming it would be advantageous for all rental income to factored into his tax return only (it wouldn't push him into the next tax band). Is there any way to achieve this, e.g. would he have to be sole owner of the property? And would a joint mortgage on the property affect this in anyway?

    I've not found any helpful information on households with mixed tax thresholds so if anyone has any knowledge or experience of this, it would be great. Thanks

    #2
    Yes, but even more advantageous if he got a better paying job.
    I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

    Comment


      #3
      Wow. Perhaps I should have replaced the 'he' with 'she' to garner a more helpful response?

      Any constructive advice re ownership, etc?

      Comment


        #4
        As married couples if you own property in joint names its assumed to be a 50:50 split.
        You use a mechanism called a deed of trust to set the owner ship to the proportion that suits you for tax purposes and send confirmation to HMRC using a special form (Form 17).

        It's a very routine thing for a solicitor to do and most would have a standard fee for the service.
        You might find that doing this for your current property is also an advantage.

        You can change the proportions using the same mechanism if your circumstances change.
        When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
        Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

        Comment

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        • Reply to Caught out by changes to Capital Gains Tax
          by reluctantlandlord1976
          Hi Andrew
          First of all I've got an initial appointment to speak to an accountant on Friday!

          Can I just check where you write ' ...at death 1/6th of the value of the whole would have been deemed to pass to you for CGT purposes as the survivors would share the whole'.

          Does...
          08-12-2021, 18:02 PM
        • Caught out by changes to Capital Gains Tax
          by reluctantlandlord1976
          I appreciate 'ignorance' is no excuse, however there are some mitigating factors, i.e. due to illness etc.

          1. Previous family home rented out - terrible tenants - left owing rent, bad repairs etc. [usual story for some] subsequently property not let for 2 years for a number of reasons while...
          06-12-2021, 13:51 PM
        • Reply to Caught out by changes to Capital Gains Tax
          by jpkeates
          Even if probate wasn't mandatory, it would probably have been useful.
          08-12-2021, 13:44 PM
        • Reply to Caught out by changes to Capital Gains Tax
          by AndrewDod
          Yes this would be the case if it was jointly owned (not as tenants in common). The situation would be that at death 1/6th of the value of the whole would have been deemed to pass to you (for CGT purposes), as the survivors would share the whole.

          So for the 3 periods you would be taken...
          08-12-2021, 12:51 PM
        • Reply to Caught out by changes to Capital Gains Tax
          by reluctantlandlord1976
          jpkeates
          There was no estate as such, property jointly owned - they were both retired at time of purchase living on small pensions, hence I bought with them so they could stay in the home they'd been renting from council from early 1950s to March 1982 at time of purchase. And I paid for the initial...
          08-12-2021, 10:50 AM
        • Reply to Caught out by changes to Capital Gains Tax
          by jpkeates
          I don't know the historic thresholds, but it's bizarre that there's no probate for both of your parents, their estate has to be tiny for that to be possible nowadays.
          It's probably too late for HMRC to do anything about that, but that process sets the values for CGT calculations later on, so it's...
          08-12-2021, 10:28 AM
        • Reply to Caught out by changes to Capital Gains Tax
          by reluctantlandlord1976
          Morning Andrew
          Thanks for your response early this morning and clarifying I have to make three separate calculations [the split wasn't clear on the CGT calculator].
          I understand the query on the value but this is an ex council house on a council estate [I feel I have to defend it here as...
          08-12-2021, 08:45 AM
        • Reply to Caught out by changes to Capital Gains Tax
          by AndrewDod
          As gordon indicates you need to consider it in three entirely separate parts, each have their own gain and calculation --

          The part YOU owned before Death 1
          The part YOU owned between Death 1 and Death 2
          The part you owned after Death 2

          Based on the values you give...
          08-12-2021, 05:52 AM
        • Reply to Caught out by changes to Capital Gains Tax
          by reluctantlandlord1976
          Thank you Gordon, didn't see your response this afternoon. I will look at this with fresh eyes tomorrow as it's late now.
          I've put some figures in my reply to a post just now but answers below to your questions.

          a] £80k Jan 2021 sale price.
          b] As property purchased before...
          08-12-2021, 00:55 AM
        • Reply to Caught out by changes to Capital Gains Tax
          by reluctantlandlord1976
          Andrew, apologies only just seen your post [was it awaiting approval did you say?] answers are:

          Purchased March 1982 as joint tenancy - so equal split of 33 1/3% each party
          Parent 2 died September 2007 - as joint tenancy I inherited their share - so at this point I own 100% of property...
          08-12-2021, 00:41 AM
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