Sole Ownership higher tax band in Scotland?

by Readers Question

15:52 PM, 7th May 2019
About 3 weeks ago

Sole Ownership higher tax band in Scotland?

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Sole Ownership higher tax band in Scotland?

I am a sole owner of a property (House) in England and on a higher tax band. I stayed in the property for 21 months and had to move out to different city (in Scotland) for job purposes. The house is currently on mortgage for another 23 years but have received consent to let last week. My wife currently doesn’t pay any tax as she is House maker.

I will advertise my property for lease from next week. Is there a way I could move my rental income which will be taxed 40% to her income to save on the tax purposes.

England has a tax slab of 20% up to £46000 while Scotland has up to £43000. Property being in England, will I get any benefit of £3000?

Also is there anything which I should consider at this point to avoid paying more in future like CGT etc etc.

Appreciate your help in advance.

PK



Comments

Mark Alexander

16:11 PM, 7th May 2019
About 3 weeks ago

As of April 6th 2019 you only pay higher rates of tax if your income exceeds £50,000.

As the property is in England you can use a Declaration of trust to split beneficial ownership, and hence tax, with your lower earning spouse. Please see https://www.property118.com/declaration-of-trust/

Simon Lever

9:50 AM, 11th May 2019
About 2 weeks ago

The article Mark refers to is very comprehensive.
Please remember that as a married couple if you wish to have rents paid at a different split to 50:50 then the only split can be in the ratio of the underlying ownership. This is fine when you are just receiving rents but you do have to consider CGT allowances when you come to sell the property.
99:1 split may not be ideal for this purpose.

pkapdi

10:18 AM, 12th May 2019
About 2 weeks ago

Reply to the comment left by Simon Lever at 11/05/2019 - 09:50
Hi Simon,
Thanks for your reply.
I have 20% help to buy government ownership. They have given me consent to let. Do I need to inform them as well?

Can I split the rent 50:50 or 99:1 even when the house is in sole ownership? As you have said its based on underlying ownership, i am 100% legal owner of the property.

Mark has specified in his last para in the above link that only declaration of trust is needed and can split the beneficial ownership. Do we have any reference on HMRC website or somewhere which I can refer it to my accountant. He is saying as the property is only in your name, wife cannot benefit unless it was a joint ownership.
Appreciate for your advice.

pkapdi

10:52 AM, 12th May 2019
About 2 weeks ago

Reply to the comment left by Mark Alexander at 07/05/2019 - 16:11
Hi Mark,
Thanks for your reply. As I will be paying tax for more than 180 days in Scotland I will be liable to tax as per Scotland. So I assume the tax slab will change at £43430.
https://www.gov.uk/guidance/work-out-if-youll-pay-the-scottish-rate-of-income-tax
Appreciate your help.
Thanks,
Pratik


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