Rental income transfer to my wife

Thanks HMRC for the guidance. Just to clarify as I wasn't sure if settlement legislation would apply - as my wife would be the beneficial owner of 60% of the property (capital and income), she should declare the income on her self assessment tax return. I as the legal owner but beneficial owner of 40% would declare 40% of the income on my tax return. Thanks.

Hi harvshow B,
Thank you for your question.
Most types of trusts now need to be registered with HMRC via the Trust Registration Service. You can find guidance on the registration requirements and how to register at: Register a trust as a trustee.
If both entitlement to the income and the property are in unequal shares, a Form 17 election can be made to allow profits or losses to be split according to their actual share of ownership in the property.
For further information, please see: Declare beneficial interests in joint property and income.
Thank you.

Hi harvshow B,
As long as HMRC have been advised of the alternative split and you have your acknowledgement then yes it will be declared as per the beneficial ownership.
Thank you.
 

Hi, I'm a UK resident, and this is regarding a joint account I intend to open with my brother (who is not a UK resident), in an overseas bank. I understand that under normal circumstances, I would be liable to tax on 50% of the gains (interest and dividend income, and capital gains tax when an asset in the portfolio is sold). However, we wish to alter this arrangement such that I pay tax (in the UK) on the entire 100% of the gains instead of the 50/50 split. I understand that this can be achieved if we prepare a valid declaration of trust, in order to indicate that while we are both legal owners, beneficial ownership will be solely in my name. My questions are; 1) I believe a Form 17 is not required, as we are not spouses. Is this correct? 2) Should I keep the declaration of trust document in my possession until I am asked for it by HMRC, or does it need to be posted to HMRC? 3) Am I correct in understanding that this type of arrangement does not require registration, such as with the Trust Registration Service? 4) Am I correct in understanding that the only impact this will have on my self-assessment is the increase in reported gains (to 100% of gains instead of 50%)? My specific concerns are whether there will be any additional impact on the types of tax due, the tax structure, or the need to fill out any additional forms? Thank you

Hi HMRC, My wife and I have a similar situation however I am in the UK Military and posted to Texas for 3 years so may have additional considerations. Details and RFIs below. Background We will be assigned to Texas for 3 years under a NATO 2 Visa and I will still pay tax within the UK on my military salary. I own a property that I will be renting out for the duration of the tour with permission from the mortgage company to remain on a residential mortgage for the duration given Armed Forces Covenant, The property is solely in my name. My wife is still classed as a first time buyer and has no involvement in the property. My Wife will not be working while we are in Texas and to provide her an income I intend on assign 100% of the rental income from the property to her. My current understanding: From research online I understand that I can make my wife a beneficial owner through benefit of trust of our house and this would entitle her to receive income from the rent. We would then complete TSEM9520 - Ownership and income tax: express trusts - written declaration - HMRC internal manual - GOV.UK (www.gov.uk) to ensure “A declaration of trust is usually a statement by the legal owner of property that s/he holds the beneficial interest for someone else. S/he is not transferring the legal title.” I s this all that is required to permit my wife to receive 100% income from the rental agreement? There is also Form 17 that I think we are required to submit to ensure rental income can be 100% to my wife and 0% to me Thus allowing the first £12.5k to be 0% tax and the remainder at 20% tax? Additionally, it’s my understanding that we would need to submit a NRL-1 for my wife to ensure the rental management company will transfer 100% of rental income (minus fees) to her UK account and that she will then have to declare the rental income on an annual self assessment. This would mean that my wife loses First Time Buyer status given HMRC definition of interest in property? Please can you also provide a template for deed of trust? Who needs to be informed of the deed of trust and in what format? We have tenants moving in on Aug 8; what of the Deed of Trust, Form 17, NRL-1 need to be completed by then? What of the Deed of Trust, Form 17, NRL-1 need to be completed by the end of the tax year? What other tax implications are there against my mortgage on the property (this includes Government HTB) Are there any additional tax relief schemes we should be aware of given we're married, living overseas, serving in the UK Military? What impact does this have, if any on capital gains tax upon return to the UK? I appreciate there is alot here, Ideally I would talk this through with one of your tax specialists but happy to communicate on this forum for others awareness. Is there a number to speak to a HMRC representative? I'm nervous about this as there is contradictory statements on the forum and the consequences for making errors here could be significant. Look forward to your response. Kind regards, Steven

Hi ,
 

Thank you for your question. As you correctly state, you can assign beneficial interest to your wife using a Deed of Trust or a Deed of Assignment. A Deed of Trust usually contains clauses relating to how the property is managed and sold wheras a Deed Of Assignment simply assigns the beneficial interests from you to your wife. Form 17 only applies when a property is jointly owned . If a property is jointly owned between husband and wife the assumption is that income is received equally. Form 17 and a relevant Declaration of Trust displaces this. Most types of Trust giving an interest in a property to someone who is not the legal owner now need to be registered with HMRC via the Trust Registration Service. Guidance can be found at : www.gov.uk/guidance/register-a-trust-as-a-trustee. Form NRL-1 is completed if you wish to receive the rental income gross  : www.gov.uk/government/publications/non-resident-landlord-application-to-have-uk-rental-income-without-deduction-of-uk-tax-nrl1 Should you wish to discuss this please phone 0300 200 3300  . Thank you .

I am in a similar position to the person who posted the original question in this thread. That is to say "I am the sole owner of a buy to let property with ongoing mortgage that I am about to start letting out. I bought the property before I met my wife so she is not on the mortgage or Title Deed. I work and pay income tax from my regular salary. My wife is not working at present. I have been advised by a Conveyancer that I can instruct them to draw up a Deed of Assignment transferring Beneficial Interest to my wife up to 100%. What I'd like to know for the purposes of completing a Self Assessment in this scenario is 1) Should all allowable expenses be at least jointly in her name in order for them to be claimed (e.g. mortgage interest relief, letting agent fees, service charges, maintenance costs etc ) in relation to her Beneficial Interest? 2) Can she only claim expenses proportional to her Beneficial Interest e.g. if she has been assigned 90% beneficial interest of the property can she only claim 90% of of the mortgage interest tax relief , or only 90% of letting agent fees as an expense ? 3) Can work carried out in doing up the property prior to actually letting out be included as an allowable expense? Thanking you in advance for your assistance

If a property becomes jointly owned 50/50 two months before the end of the tax year, is tax on the rental income due from the original sole owner or does it have to be apportioned between the joint owners for that tax year?

Hi ,
 

Thank you for your question, the property income would be apportioned to match  each persons share from the date the agreement came in to place.  Thank you .

Hi Rich Lad,
Regarding the split of expenses, please see guidance available at PIM1030 - Introduction: jointly owned property & partnerships which advises the following- However,
where the joint owners are husband and wife, or civil partners, profits and losses are treated as arising to them in equal shares unless:
•    both entitlement to the income and the property are in unequal shares, and
•    both spouses, or civil partners, must inform HMRC that their share of profits and losses is to match the share each holds in the property.
Therefore, the share of expenses would match your wife’s share in the property.
There is no guidance to indicate the bills for the property business must be in your wife’s name.
Please see guidance-Work out your rental income when you let property Capital expenditure and PIM2030 - Deductions: repairs: is it capital?  the expenses must not
be capital in nature if you wish to claim them as an expense.
Examples of how to work out Income Tax when you rent out a propertys has good examples of maintenance and repair costs too. 
Thank you.