Property in my name, can I split rental income with spouse

Hi,
 

Thank you for your question. You have stated in your actual question that you are referring to a friend and not a spouse? If this is the case I can confirm that the Deed of Trust would be accepted by HMRC. This would have to be witnessed by someone but you would not need to have it signed/authorised by a Solicitor.

Thank you.

Thank you HMRC Admin 17 How do I submit D O Trust to hmrc?

Thank you HMRC Admin 17 (You have stated in your actual question that you are referring to a friend and not a spouse?) Yes this is another property

Hi,
 

Thank you for your question. Noted.  Thank you.

Hi,
 

Thank you for your question. DOT are usually obtained through a solicitor as it is a legally binding agreement.

Thank you.

Hi HMRC Admin 17 your response (You can submit the Deed of Trust to HMRC and also split the mortgage interest in the same ratio as shown in the Deed of Trust.) Can you explain to me how do i submit DOT to hmrc ? and when do i submit it? Thank you

Hi,
 

Thank you for your question. You Can you send a copy of the deed of trust to PAYE & Self Assessment,                                                                              HMRC, BX9 1AS. The split will only take effect from the date the deed of trust was signed and witnessed. Thank you.

 

Thank you HMRC Admin 17 so my solicitor created DOT and witnessed it in 2018 it is 50/50 beneficiaries for me and my wife, but my accountant disagreed with DOT for the following regions he said because the property is only on my name (sole Name) and the beneficiary is my wife HMRC will not accept it so according to your responses, HMRC will accept DOT even though the property is in the sole name of the husband? and can i use 2018 DOT or do i need new one? Thank you very much for all your responses

Hi Sazid Mohmed
Thank you for your question.
If a property is in your sole name, then you can only separate the share of the income through a Declaration of Trust.
If you have not already submitted the Declaration of Trust created in 2018 you will need to send this to us for us to determine whether it is valid.
If you have already submitted it then I would suggest that you contact our general enquiry line on 0300 200 3300 who will be able to review your records and advise you further on the matter. 
Regards.

Thank you HMRC Admin17 and Admin 10 do i have to fill in any forms when i send DOT to HMRC to determine whether it is valid? and how long does hmrc take to respond after receiving the DOT?

Hi Sazid Mohmed,

Whoever has the beneficial ownership of a property has the beneficial ownership of the income.
For this not to apply there must be a separation of the income from property.
If you wish to transfer the right to the income to a third party, while retaining the legal and beneficial ownership of the property, you must execute a valid deed assigning the income to the third party.
The third party is then entitled to the income even though you still own the property.
For further information please refer to:

TSEM9170 - Ownership and income tax: legal background: ownership income follows property - variation

If you need advice on HMRCs post turnaround please check

Check when you can expect a reply from HMRC

Thank you.

Thank you for creating this forum – it looks like a helpful resource to navigate the tax system. I am the sole legal owner of a property, which I am looking to rent out. Could you please help me with some questions regarding sharing the rental income? A) Can I share the rental income with both my wife and my mother via a deed of trust? (e.g. 1/3 each – me, my wife, my mother) B) If so, can the three-way split of rental income be specified on a single deed of trust document or is one required per recipient? C) Am I able to create the document myself, rather than by a solicitor? (I understand that this still needs to be witnessed by someone) Many thanks, JTax

Hi
Thank you for your question.
You can have a different split in the beneficial ownership of your property in the way you have described in your question.
To change the beneficial ownership of your property you are required to complete a single Declartion of Trust.
You can create the Declartion of Trust yourself as long as it is drawn up in the correct format. More information on drawing up a vaild Declaration of Trust can be found at :
Ownership and income tax
and
Ownership and income tax
Regards.

Hi HMRC Admin 10 I have sent a declaration of trust to determine whether it is valid as you have asked me to do, its been two months no response from HMRC so i called, but they can't find my documents it was posted recorded delivery. i also have send form 17 in April they have all the documents but not dealing with it. so can you help me with these matters, please Thank you Sazid

Thank you for the quick response, HMRC Admin 10. One quick follow up: Do I need to post the Deed of Trust to HMRC or do I keep it until requested?

Hi
 

JTax ,   Thank you for your question. You should send us a copy of the Deed of Trust.

Thank you

Hi
 

Sazid Mohmed ,   Thank you for your question. Unfortunately this is not the forum for your question. You will need to telephone our general phone number on 0300 200 3300 regaring the matter. A colleague should be able to advise you when you should expect a reply to the Form 17 you have sent us.

Thank you.

 

Thank you again for your reply. In a situation where I opt to provide my mother with 100% of the income from a rental property, which is owned solely in my name, via a deed of trust, could you please clarify the following: 1) If I incur costs related to the rental property (e.g. service charge, maintenance), can these be offset against rental income that my mother receives to reduce her taxable rental income? (event though she will not be the one paying for the expenses) 2) Does my mother need to receive rental income from the property directly from the tenant or am I able to collect the rent and then send it on to her? (Without me being due to pay tax on the rental income that I would be passing on to her) 3A) Where there is a service charge expense related to the rental property (covering building maintenance, electricity, building concierge, etc), can this be offset as an expense against renal income? 3B) The service charge is paid twice annually - if the next payment is made in August (covering the Aug22-Jan23 period), can this be pro-rata applies as an expense against a rental period beginning in September? (i.e. 5/6 of that payment being applicable - excluding the month of August, before the rental began) Or would the service charge payment have to be made once the rental period begins to be applicable as an expense? Thanks again.

Hi JTax,

1) When an individual is a beneficial owner of a rental property, the rental profits from the property are deemed to belong to the beneficial owner.
To calculate profits, you need to know the expenses incurred in the rental business. Therefore, it follows that the beneficial owner can use the expenses incurred to calculate the profit.
2) As long as the beneficial owner receives the rent, there are no tax rules regarding how they receive that rent.
3) The default accounting position for rental income is the cash basis. When claiming expenses under the cash basis method of accounting, you would claim the expense in the tax year that you actually paid the expense.
A service charge that is incurred whilst letting out a property is considered to be an allowable expense.

Thank you.

Thanks for this thread - just a quick question - by giving my partner allocation of the income through a declaration of trust, does this mean that they are considered an 'owner' and if they decided to buy their own property, it would be considered as a 2nd home (and therefore due to pay double stamp duty?). We are not married. We earn the same amount, so not sure it is worth taking the chance - but wanted to know nevertheless!