I am a 40% taxpayer and my partner 0%

by Readers Question

11:22 AM, 5th November 2020
About 3 months ago

I am a 40% taxpayer and my partner 0%

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I am a 40% taxpayer and my partner 0%

Hi, I am looking to buy a BTL property with my partner (not married), and intend to have 50/50 ownership of the property.

I am a 40% taxpayer and my partner 0%.

To be tax efficient we want the rental income to be in my partner’s name.

My question – can this be done? And if so, how do we go about doing it?

Thanks in advance


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Mark Alexander

17:55 PM, 5th November 2020
About 3 months ago

You cannot split the rental income in a different proportion to the ownership of the property unless you first form a Partnership or a Smart Property Company structure.

I suggest the latter - see >>> https://www.property118.com/tax/smart-property-company-structures/

If anybody suggests a Declaration of Trust to split income say 99:1 in favour of your girlfriend, please note that the ownership of the property will also be split in that proportion. That would require you to take a huge risk, because if you ever split up, she will own 99% of the property and you will own just 1%.

Building a rental property business is just like building a property in that, if you don't get your foundations right you could face big problems down the line.


12:23 PM, 6th November 2020
About 3 months ago

As well as incorporation I also suggest you google the pros and cons of holding a property as joint tenants or tenants in common in different share proportions, and check what it says about it in the HMRC guides on gov.uk, then check your options with your solicitor.

Philip Aston

20:52 PM, 6th November 2020
About 3 months ago

We did this about 5 years ago. We filled in a particular form, if it hasn't changed then its on HMRC website. We had to send a copy of office copy entries proving I owned 1%. There was no company or partnership.
Of course I don't know if things have changed, and as you know any comments from guys like me is no substitute for advice from a tax specialist

Philip Hopson

15:33 PM, 7th November 2020
About 3 months ago

This is it, we recently sold a couple of HMO's to a first time landlord. They made (I believe) the right decision from the word go in terms of running them through a LTD company formation. Its a great basis for setting up things the right way from the word go. As Mark mentions above - its like building a house, once you have laid your foundations it's rather difficult and expensive should you have a change of heart further down the line!

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