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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4087
Experience:  FCCA FCMA CGMA ACIS
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I own two buy to let flats with my common law husband (using

Customer Question

I own two buy to let flats with my common law husband (using that phrase so I dont confuse any issues with the use of the word partner)
we are not married and not in any business partnership.
Am I right in thinking we can allocate the rental income from these two properties and therefore the tax liabilities as we see fit?
We would like to allocate all the income to just one of us
Submitted: 3 years ago.
Category: Tax
Expert:  bigduckontax replied 3 years ago.
Hello, I'm Keith and happy to help you with your question.

Well, you can, but HMRC will always assume that you share 50/50 in the absence of any other evidence and the law supports them. Otherwise it is a Tom Tiddler's ground for tax avoidance or even evasion. In exceptional circumstances rental can be split, usually if original purchase was not in equal parts when each contributed a different proportion of the purchase price.

Have a look at HMRC advice at PIM1030. This sets out the matter in some detail and opens a door to income splitting where no business partnership exists, see the second paragraph. Obviously it is best for such splits to be evidenced in writing and agreed to by both parties.

I do hope I have been able to throw some light on your problem. Please note that you will almost certainly be in for a tussle with HMRC on this matter, but stick it out, you should prevail.
Customer: replied 3 years ago.

"


Jointly owned property - no partnership


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.


 


 


so all we need to do is write down what we agree and send it in wit tax returns?

Expert:  bigduckontax replied 3 years ago.
So it would appear, HMRC guidance is quite lenient. I would suggest that your agreement also specifies that you are not in a business partnership so as to remove any lingering doubts.