Hello and welcome to the site. Thank you for your question.You are right in your understanding that where the property is owned in joint names then both partners enjoy the income and gain jointly. HMRC views this as in equal share, in the absence of other proof.As matters stand, you would both have to declare your respective share of the net profit from property income when filing your tax returns. There is a provision whereby you can opt for declaration based on actual basis. The process for it is by completing HMRC Form 17 as you are already identified.Once the completed form has been submitted to HMRC with evidence to support actual beneficial interest in other than 50:50 basis you would then declare both your share of income and gain on that basis.You can download Form 17 here
You say you have no income. Your share of profit would therefore carry no tax charge. Your wife would pay income tax at 40% on her share (14,800/2 = £7,400) amounting to £2,960.
I hope this is helpful and answers your question.
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Thank you for your reply.
Ref Form P17
Is there a method by which my wife could transfer all of or the majority proportion of the house to me to enable completion of Form P 17? (I imagine this would need to be for next tax year now.)
Is this possible or advisable and are there any potential tax penalties eg Capital gains tax?
XXXX, thank you fo ryour reply.Your wife could transfer her share of beneficial interest in the property to you by signing a declaration or a deed. IT would be helpful if this document is witnessed by an independent person e.g a solicitor and the title deed is amended to reflect change of ownership.Potential capital gains tax..The transfer of ownership will in itself not give rise to capital gains tax as transfers between spouses are tax neutral, i.e. no gain or loss - the transfer is deemed at initial cost.When you come to selling the property, bear in mind you will be able to claim one lot of gains allowance only as opposed to 2 at present,as there would be one owner then.Prima facie, there would be a case to transfer to save on higher rate of tax for both income tax and capital gains tax purposes.I hope this is helpful.
Thank you very much
I have one last query regarding this. Would this arrangement only be possible for next tax year?
XXXX, thank you for your reply.Frankly speaking, you can not do anything for last tax year.You could do the transfer now make it effective for current tax year 2014-15.I hope this is helpful.
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