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taxadvisor.uk
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 currently have a BTL property jointly owned with my wife.

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I currently have a BTL property jointly owned with my wife. I am a 20% taxpayer, my wife is a 40% taxpayer. My accountant says that we must splits the income 50/50 which is fair enough however is it legitimate to change the title to the property so that I own it 100% and thus income produced would be taxed at 20% or would HMRC look at this as tax evasion. My accountant says that even if the ownership of the property is changed I would still have to split the income 50/50. Many Thanks
Submitted: 2 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 2 years ago.
Hello and welcome to the site. Thank you for your question.

This is how HMRC treat properties in joint names

If you live together with your spouse or civil partner, we normally treat income from property held in your joint names as if it belonged to you in equal shares and tax each of you on half of the income, regardless of actual ownership.

If you wish for this share to be taxed in any other proportion than 50:50 the you should complete Form 17 (declaration of beneficial interest in joint property and income) and submit it to your local tax office.

Please complete this form if you want to be taxed on your actual shares (known as `actual basis'). You will also need to provide evidence that your beneficial interests in the property are unequal, for example a declaration or deed.

https://www.gov.uk/government/publications/income-tax-declaration-of-beneficial-interests-in-joint-property-and-income-17

You will find the article here helpful

http://www.step.org/5050-rule

There is always an artlcle written by my accountancy body that you would find helpful.. the link is here

http://www.accaglobal.com/gb/en/technical-activities/technical-resources-search/2014/october/jointly-owned-property-form-17.html


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.

Customer: replied 2 years ago.

I know about form17 but that doesn't answer my question. I was asking if the total transfer of the property to one spouse is legitimate and does away with the need for form 17

Expert:  taxadvisor.uk replied 2 years ago.

Thank you for your reply.

Your wife could transfer her share of the property to you by gifting it to you. This is legitimate and the transfer would be reflected on the title deed. This transfer would be tax neutral for CGT purposes. This way you would have 100% ownership of the property.

Confirmation of this can be found here

https://www.gov.uk/capital-gains-tax/gifts

I hope this is helpful.

Customer: replied 2 years ago.

So just to be clear if the property is transferred so that I own it 100% on the title deeds then I would declare all the income produced on my tax return only.

Expert:  taxadvisor.uk replied 2 years ago.
Thank you for your reply.

If your wife transfers her share in the property to you and you have 100% ownership of it, then you decalre 100% of the income on your tax return only.

I hope this is helpful.
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4939
Experience: FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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Expert:  taxadvisor.uk replied 2 years ago.
I thank you for accepting my answer.

Best wishes.

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