Rental income transfer to my wife

Hi,
In relation to whether a SEV Form/ restriction to change to tenants in common, as transfer of deed is not taking place, we would expect that this would not be necessary but we would advise to contact the Land Registry direct as this forum is based on income from property queries.
As the property is held in joint names and you wish to declare uneven interests, the Form 17 would be the appropriate form to complete alongside the declaration of trust/ deed of trust.
Thankyou.

I am writing to seek clarification on the possibility and implications of transferring beneficial interest in two Buy-to-Let (BTL) properties that I own in my sole name, both located in Scotland. My intention is to transfer 70% of the rental profits to my wife, who currently does not own any share in the properties, to enable her to be responsible for paying tax on her share of the income. I am exploring options to achieve this while retaining ownership of the properties. In researching potential methods, I came across references to a Deed of Assignment and a Declaration of Trust in some HMRC communications in other posts. Could you please confirm whether either of these options is accepted by HMRC for properties situated in Scotland? Additionally, I would appreciate information on any potential Land and Buildings Transaction Tax (LBTT), Additional Dwelling Supplement (ADS), or Capital Gains Tax (CGT) implications that may arise from transferring beneficial interest to my wife. Your guidance on the above matters would be invaluable in ensuring compliance with tax regulations. I appreciate your time and assistance in addressing these queries. Thank you for your attention to this matter.

Hi MrOttaviano,
We would recommend that you visit .Gov.uk website to see if you meet the criteria to make a Form 17 election.
Declare beneficial interests in joint property and income
This begins with all parties concerned having joint ownership please note.
The unequal share of income arising from the property depends on this.
In regard to the LBBTT and ADS, there is Capital GainsTax guidance is available on the Gov.UK website. 
Guidance here:
Capital Gains Tax
 

Hi HMRC, please could you advise me on the following... My wife is the sole owner of a property, of which she transferred 100% of the rental income to me (her husband) two years ago by setting up a declaration of trust. We would now like to revert the agreement and transfer all the rental income back to my wife for tax purposes. What do we need to do in order to put this into effect? Is it just a case of revoking the declaration of trust - in which case how does one do this? Would a simple, signed & dated statement revoking the original DoT suffice? Thanks in advance for your help.

Hi,
The income should be reported in accordance with who has the beneficial interest.  
Therefore to revert the original agreement we would suggest that you change, vary or draw up another trust deed which would need to be signed/dated.
We do not need sight of this.
Thankyou.

Dear HMRC, I'm currently owning a rental property which is solely owned by me and title is on my name only. I had already done "Deed of assignment" to transfer the beneficial interest in a property to my wife for tax benefit as she is not working. To deal with the property easier in future, I'm looking to add my wife as a "Joint Owner". Once we both are in the property title, we both will hold 50%-50% share and we have to do tax declaration for the rental income. I believe I can transfer the beneficial interest in a property to my wife. Since I already have Deed of Assignment, Do I need to do Deed of Trust now as we are now joint owners or existing Deed of assignment still works? Could you please advise on this? or just completing Form 17 is suffice? In case if it requires "Deed of Trust", do I need to get this done by Solicitor? Or do we have "deed of trust" as template that I can amend it and use it, can you please share it if you have? Thanks in advance.

Hi,
We would advise that as you are transferring 50% of the legal title to your Wife, that a Deed of Trust should be submitted updating the split in property to the 50/50 shares you have stated.
Although there is not an official HMRC template to use, various sources do offer material which would cover your situation.
We would advise to consult legal advice surrounding the requirements of the Deed as certain terms and conditions may have been included in the initial purchase of the property.
Thankyou.

Hi, could you please advise me on the following: I jointly own 2 properties with my sister 50/50 and they have no mortgages. The property are rented out. I would like to transfer part of my share to my self-employed wife, and in doing so, I would avoid being a higher rate taxpayer as the full rental income takes me over the threshold. Whereas my wife would still remain on the basic rate tax band. So I would like to transfer a part of the rental income to my wife. I believe I would need to do a Declaration of Bare Trust, is that right? Is it possible for me to do the part share and how do I put it into effect? I have tried calling on numerous occasions but have not been successful. Is there another way I can contact you via phone? Many thanks in advance.

Hi, further to my previous post. Should I do a Declaration of Bare Trust or a Deed of Assignment? Thank you in advance.

Hi,
In some cases, it will be made clear that the legal owner is not the beneficial owner.
The legal and beneficial ownership of property may be separated by a valid declaration of trust.
Please see the following:
Declare beneficial interests in joint property and income for completion and conditions of a Form 17 application.
This will be relevant to yourself and your wife.
Your sister will declare her income from property separately and cannot be included in any Form 17 application.  
Thank you.

Hi, thank you for your reply. Just to clarify, my wife is not on the title deed on the properties that are let out, but at the same time, I would like her to have only a share of the rental income without having to change the deeds. Does this change anything previously said to me in your response? Many thanks

 

Thank you for your question. As your wife is not listed on the title deed of the rental properties, a Form 17 would not be appropriate for your situation, however, a valid declaration of trust would suffice to transfer beneficial interests in terms of rental income and expenses. Thanks

Hi HMRC, Please could you clarify the below scenario. I have an ongoing buy to let mortgage and the title deed is solely on my name. Will it be possible to transfer all the income generated from rental property to my spouse as my spouse is not working. Could you clarify the below on this. 1. Do I need to get a consent from my mortgage lender to transfer all the rental income to my spouse. 2. Do I need to send a formal letter I e declaration of trust to HMRC ? Could you let me the postal address to send this? 3. Will I be able to get an acknowledgement? Please could you let me know on this? Many thanks. 1.

Hi,
 

Thank you for your question I am not aware you need consent from your mortgage lender maybe check with then just to be sure  a valid declaration of trust would suffice to transfer beneficial interests in terms of rental income and expenses.  www.gov.uk/hmrc-internal-manuals/trusts-settlements-and-estates-manual/tsem9520 gives details of how to make a declaration of trust you would need to send this to PAYE/SA HMRC BX9 1AS IF you ask in your letter for acknowledgement it should be able to be given  . Thank you .

I need advice on a similar issue and would like to know if rental income can be transferred to a family member other than a spouse. I recently bought a buy to let property and I have ongoing mortgage in my name. I pay income tax as a self-employed. The rental income from the “buy to let” property is just under £20,000 a year. My 24 years old son has completed his master’s degree but not in the employment at the moment and we pay all his expenses. He has not applied for unemployment benefits and is losing out on national insurance contributions. I would like to transfer the rental income to my son even though the property and the mortgage remains in my name so he can pay tax and national insurance from that income. Please advise if it is possible to transfer rental income to my son and how to go about it.

Hi,

Rental income can be transferred to a family member other than a spouse, but we would expect that the share of the rental income matched the share of the legal ownership. If you transferred 30% to your son, then we would expect that your son declared 30% of the rental profits.  

PIM1030 does allow the share of the rental profits to be split differently from the share of the actual ownership. 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.  But 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.  

PIM1030 - Introduction: jointly owned property & partnerships

Thank you.