Income split on FHL owned as tenants in common by family members

Hi there, We have a property which is operating as Furnished Holiday Letting. The property is owned, as tenants in common, by me, my wife, and our two children. My wife and I each own 1% and our children each own 49%. The children are over eighteen years of age, and the property is located in England. Because my wife does all of the detailed administration and management of the property, can we agree between us that, for tax purposes, all of the income belongs to my wife, which she will the account for on her self assessment tax return.

Hi NigelAsh,
You cannot treat all of the income from your FHL as your Wifes for tax purposes as this is not a true reflection of who has a beneficial interest in the property and income.
Based on what you have said yourself and your Wife should declare 1% each and your children 49% each.
Thank you. 

Hi there, Thank you for your prompt reply. Could I please ask for a further clarification regarding TSEM9820 - Property held jointly by married couples or civil partners: The 50/50 rule: Income from furnished holiday lettings: Please see extract below - does this provide for the flexibility to alter the split of income as envisaged in my first enquiry. Thank you for your assistance Regards Nigel Ash Extract from TSEM 9820:- The 50/50 rule does not apply to income arising from a UK property business which consists of, or so far as it includes, the commercial letting of furnished holiday accommodation. If a spouse or civil partner carries on the activity alone: that spouse or civil partner is taxable on the income. If a spouse or civil partner carries on the activity with others: the income is split for tax purposes in the way the parties have agreed to split the profits amongst themselves. Previous page Next page

Nigel Ash thank you for your supplementary question
You are correct that the 50:50 rules does not apply in your circumstances.

I have provided a link to the guidance at PIM1030 here PIM1030 - Introduction: jointly owned property & partnerships - HMRC internal manual 
This explains that where there is no partnership, the share of any profit or loss arising from jointly owned property will normally be the same as the share owned in the property being let. Joint owners can agree a different division of profits and losses and so occasionally the share of the profits or losses will be different from the share in the property.
The share for tax purposes must be the same as the share actually agreed.

I would suggest that you get something drawn up in writing to show the beneficial interest in the income has been changed. You don’t need to provide this to us but if an enquiry was opened you would need to be able to prove the agreement.
This doesn’t mean legal ownership will change, you will still legally own the property in the proportion you do now but beneficial entitlement to the income can be changed.
You may want to get independent advice.

Thank you