Transferring my share of our buy to let to my wife to save tax

Hi,

Hopefully nearly all your questions will be answered on our Declarations of Trust page under the Legal Advice tab above.
Please see >> https://www.property118.com/need-become-rental-partnership/93073/

Please also see our tax advice page >> https://www.property118.com/tax/

Snippet of Declarations of Trust page below:

Using Up Basic Rate Tax Allowances

Ownership restructuring for tax purposes

Finance costs restrictions as per The Finance (No. 2) Act 2015 will only result in increased tax becoming payable where the total of ….

rental profit (as currently calculated for the 2016/17 tax year)
plus mortgage interest
plus other taxable income

…. exceeds £43,000 per person per annum (rising to £50,000 by the year 2020)

Profits and mortgage costs can be managed between spouses by transferring the beneficial ownership in property using a Declaration of Trust. The optimal split ensures both spouses utilise up to their full annual allowance as basic rate tax-payers. Once this is fully utilised it makes sense to form a Limited Company for any future purchases of rental property.

If you are not married and want to consider forming a partnership for tax purposes you need to take advice – please see the form below.

HMRC’s default position for taxation of rental income from jointly owned properties is that rental profit is split 50/50. This can be amended to any share (e.g. 99%/1%) subject to a Declaration of Trust and filing a Form 17 with HMRC within 60 days. Note that transfers to anybody other than a spouse could trigger Capital Gains Tax becoming payable.

Where property is owned by one person a Declaration of Trust can also be used to split the beneficial ownership. In that case Form 17 would not be applicable but HMRC would need to be informed of the arrangement and you would each need to complete tax returns for your share of rental profits in future years.

The scenario you have outlined is virtually pound for pound identical to an example I wrote in one of the landlord tax tutorials – see >>> https://www.property118.com/free-landlord-tax-tutorials/

It is the second one down in the list of tutorials available for free download via the link above and is entitled “Tax planning opportunities where spouse earns less than £43,000 a year”
.

Excellent !!

Does anyone know a decent solicitor who could set up a Declaration of trust for us ?

I’m sorry to say the solicitor we use would probably complicate matters out of recognition !!

Thanks,

Richard

Reply to the comment left by “richard fleckney” at “18/01/2017 – 05:59“:

Yes, contact Mark Smith at Cotswold Barristers. Fixed fee of £250 plus VAT – link to member profile and contact form https://www.property118.com/member/?id=1945
.

Does anyone know if you can get a deed of trust done in Scotland. As far as I can see this is only possible in England and Wales. I have found nothing about it up here.

Good question from Angela. Thought that as supporting evidence to HMRC Form 17 this would be acceptable across the UK, but Scotland does have a different legal system so maybe not!

Reply to the comment left by Neil Patterson at 16/01/2017 – 11:29
In this case (married but property legally owned by higher rate tax payer) would the beneficial ownership transfer trigger SDLT for a BTL property?

Reply to the comment left by Paul Harsley at 05/11/2018 – 19:42
In some cases yes, in others no. Professional advice is required. Please book a consultation