Rental income split with spouse for foreign property

Hi there, My spouse and I currently own a property in Poland in unequal shares (25%/75%). We both live in Scotland - I am a Higher Rate tax payer and my spouse is an Intermediate Rate tax payer. I would like to reallocate this property ownership so that my spouse receives the majority of rental income (e.g. 90%/10%). I understand this is possible via Form 17. The only question I have is how this works for foreign property. Is it sufficient for UK tax purposes to submit this form in the UK, or does the property deed also have to be amended within Poland? Thank you!

Hi

Thank you for your question.
Under normal circumstances, a Form 17 would be completed when Spouses/Civil Partners own a property in unequal shares, based on your question this would apply to your situation.
I have attached further guidance relating to transferring beneficial interest, in this case, rental income to another party.
Declare beneficial interests in joint property and income.
Found within PIM4702, additional information is given on rent from property outside of the UK:
PIM4702 - Rent from property outside the UK: Income Tax (IT)
I would advise that if completing the Form 17 that this only applies to UK property, so with your property outside of the UK, this would not apply. 

Thank you.

Hi there, Thank you for the response. Does this mean my spouse and I have no option to reallocate the share of rental income we each receive from our overseas jointly-owned property (i.e. as spouses we must pay tax as if the income were split 50/50 regardless of the ownership split)? Is there no Form 17 equivalent for overseas property rental income?

Hi,
 

Thank you for your question. In order to reallocate property income for an overseas property, I would advise that you contact the overseas tax authority in order to determine if a Form 17 equivalent exists for that country. As mentioned in the earlier response, the Form 17 only applies to UK property as taxing rights and disclosure would fall under UK tax authorities. Thank you.

Hi there, Thank you for the follow-up on this. Are you saying that, if the overseas tax authority allows us to reallocate property income for the overseas property (e.g. 90% to my spouse and 10% to me), this would also allow us to pay UK income tax on the rental income as per this new split?

Hi,
 

Thank you for your question. I would advise that depending on the overseas tax authority rules, tax may be deducted there based on how much rental income you receive. When completing the SA106 Foreign supplementary page, any tax deducted by the overseas authority would be disclosed within this page to determine any credit due. If foreign rental income is received, then the expectation would be that income would reflect reality. Thanks