Property rental income split between spouses...


Q. I am an employee and am liable to income tax at the higher rate. I also receive income from a rental property that I own. My wife does not work. If I instruct the tenants to pay the rent directly to my wife, will that absolve me from declaring it on my own self-assessment return and avoid paying higher rate tax on it? 

Unfortunately this will not be possible. You cannot assign income to someone else - even to a spouse - to avoid paying tax on it. However, you could put the property into joint names, even if you have a declaration of trust behind the transfer restricting her beneficial ownership to a small amount (say 5%), she will be taxed on 50% of the rental income. If you want your wife to be taxed on a greater part of the rental income, you will have to transfer a greater part of the property ownership to her and make an election for tax using form 17.  

Added By: Sharon Worger on 11th Jun 2018 - 14:11
Last Updated: 11th Jun 2018 - 15:00

Number of Views: 642
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