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taxadvisor.uk, Chartered Certified Accountant
Category: Tax
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Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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I live in Scotland. I am am fully employed and also have aself

Resolved Question:

I live in Scotland. I am am fully employed and also have aself employment tax return due to small croft activity. My wife is part time employed at present. We have an extra small house next door which we rent out and need to deal with tax wise for the last financial year. Given that I am a 40% tax payer and my wife is a 20% payer, could we make the rental income on this house as self employment income for her alone? Rented house in question is on our house deeds which are only in my name at present
Submitted: 2 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 2 years ago.
Hello and welcome to the site. Thank you for your question.

The short answer is NO. Now I will explain how income from jointly owned assets/property is taxed.

In order for the rental income to be shared equally or in any other ratio, the property has to be in joint names. The fact the house deeds are in your name alone makes the rental income as yours.

You should add your wife's name on the title deed to enable the income to be split in the first instant.

Secondly, if you wish the income split ratio to be any different from the normally applied split by HMRC i.e. 50:50 then you would have to show that she has more financial interest in the property. This can be done by filing a form 17 declaration of beneficial interests in joint property and income. You will also need to provide evidence that your financial interest in the property are unequal.

More information on this can be found here

http://www.hmrc.gov.uk/forms/form17.pdf


I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

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Expert:  taxadvisor.uk replied 2 years ago.
I thank you for accepting my answer.

Best wishes.

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