Deed of assignment

Is it acceptable to split the rental income of a higher-rate taxpayer with a lower-rate payer 10/90 where the property is solely owned by the higher-rate taxpayer? This would reduce the tax payable by the higher-rate tax payer due to a "lower" rental income. Similarly, can the expenses be claimed 100% by the higher-rate taxpayer to further reduce the profit taxable at the higher rate?

Hi,
To split the rental income in unequal share, both parties must have a beneficial interest in the ownership of the property.
This must be done by redigesting both parties on the property Deeds and to submit a Deed of Trust signed and witnessed accordingly to HMRC.
As regards the expenses question, the expenses incurred in maintenance of the property will share equally in accordance with the split of unequal shares.
Therefore, if the property income is split 10/90, the expense with be treated the same way.
Furthermore, if the property is held under joint ownership of husband and wife, Form 17 must be completed.  
Further information can be found on our website PIM1030 - Introduction: jointly owned property & partnerships
Thank you.

Thank you. I'm a little confused. My understanding is that where a property is solely owned, the rental income can be (shared) allocated by a Deed of Assignment, in this case 90/10 - owner and wife. Where a property is jointly owned and the rental income is spilt other than 50/50, then that would need a Deed of Trust and Form 17. Am I misunderstanding this?

Hi, I am not a HMRC Admin but a married couple cannot assign only the right to income for tax purposes. This is due to the rules on settlements when what is being gifted is only a right to income. https://www.gov.uk/hmrc-internal-manuals/trusts-settlements-and-estates-manual/tsem4205 So if you do a deed of assignment for the rental income only then, for tax purposes, it is still treated as your income. This is why you need to gift the capital too. So it then isn't wholly or substantially a right to income. However as per example 4a, there can't be any arrangement where you can request it back as while it isn't wholly or substantially a right to income, it isn't an outright gift either and it is only outright gifts that are an exception for settlements.

Hi,
You are correct in your thinking but if you seek clarification you can find more on how to report it here:
Declare beneficial interests in joint property and income
Thank you.