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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 5207
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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Assistant: What do you want help with? I have a query about

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Assistant: Hello. What do you want help with?
Customer: I have a query about tax on a UK rental property.
Assistant: The Accountant will know how to help. Please tell me more, so we can help you best.
Customer: I own a rental property jointly with my wife, it used to be our family home. She is a low rate tax payer and I pay the higher rate. We have always split the income 50-50.She does most of the work on it and I was wondering if we can declare it so she pays most of the tax at her lower rate?We both own it equally.
Assistant: Is there anything else the Accountant should be aware of?
Customer: No don't think so. My wife is self employed and earns 18k. I earn about 80k on my salary. Rental income is 24k.

Hello and welcome to JustAnswer. I am here to help you. I am reviewing your question and will respond to you shortly.
Many thanks

Thank you for your question.

Under UK tax rules, a property owned jointly with a spouse is deemed to accrue any income from it and/or gain on 50:50 basis. If you wish to vary this split, you need to complete Form 17 (declaration of beneficial interests in joint property and income) supported by a declaration showing respective beneficial interest.

More information on this can be found here

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

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.

taxadvisor.uk and other Tax Specialists are ready to help you
Customer: replied 3 months ago.
Thanks. Just trying to understand.Just a bit confused as it says do not use this form if the property is not held in unequal parts. We legally own it jointly but my wife does all the work on it. Are you saying that I can fill out this form and say I own 5% and she owns 95%Also what document do we need to provide so we can comply with "supported by a declaration showing respective beneficial interest".Thanks.

Thank you for your reply.

Normal assumption is that property interest is held in equal share. Use Form 17 to make a split in unequal proportion. If you wish your wife to have 95% of the property share then you are effectively gifting her 45% of the total value so the proportion held after gift is 95% to her and 5% to you.

You can prepare a statement as statutory declaration of trust stating new stakeholding and get it witnessed by a solicitor.

I hope this is helpful

Customer: replied 3 months ago.
Ok thanks. That makes sense.When would it take effect if we did this now? Would it be the next full tax year.
Customer: replied 3 months ago.
Ok thanks. That makes sense.When would it take effect if we did this now? Would it be the next full tax year?

Thank you for your reply. My apologies for the delay in response as I was away from my desk.

The change is effective from date of notification. You can not back date the change in split. If you were to do it now you would get near full year effect on tax for 2018-19 tax year.

Many thanks

Customer: replied 3 months ago.
Thanks. Do mortgage companies care if we do this sort of split, we have a joint mortgage. Also do you know of any templates for the declaration on the internet?Thanks your advice is clarifying what I need to do.

Thank you for your reply.

I would advise you to make mortgage company aware of your intention in case there is an objection. They can be a problem!

I am not aware of a template as I have not looked for one.

Best wishes.