Just to double check.
The husband is a higher rate tax payer.
The wife is a low rate tax payer.
If the husband lets to property to the wife with permission to sub-let.
lets say for simplicity letting cost to wife is £12,000 per year.
Wife pays £12,000 per year to husband.
Husband deducts mortgage interest cost (£10,000) and 10% wear & tear allowance (£1,200), leaving him a net rental income of £800 on which he pays 40% tax.
Wife sublets and gets and rental income of £20,000.
Wife deducts £12,000 letting costs paid to husband, leaving her a net rental income of £8,000 on which she pays tax at the lower rate (23%?).
wouldn't HMRC view that as tax evasion by the husband because he is moving rental income to his wife whom pays tax at a lower tax rate?