MrOttaviano

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.

Dear HMRC, I hope this message finds you well. I am seeking guidance on the tax implications of my residential property ownership and potential income-sharing scenario. I own two Buy-to-Let (BTL) properties in Scotland, both in my name. I am considering the following option: LLP Setup: I am contemplating the creation of a LLP with my wife. In this setup, the properties would remain in my name, with only the rental income being transferred to the LLP for distribution between us. Can I distribute the rental income unevenly, say 60-70% to my partner and 30-40% to me? Would a Declaration of Trust be necessary for such uneven income sharing? The HMRC manual suggests that no LBTT, CGT, or ADS would be payable upon setting up the LLP; could you please confirm this? Furthermore, if I set up a LLP, I plan to transfer the properties to a Limited Company (LTD) in three years. According to the manual, this transfer would be exempt from LBTT and ADS if the LLP exists for more than three years. Can you confirm the exemption from LBTT and ADS when transferring to a LTD after three years? Will there be any other taxes applicable to such a transfer? I appreciate your insights on this scenario and if these arrangements fall under settlements legislation. Your prompt response will be highly valued. Thank you for your time.