Situation is husband 40% taxpayer - wife no income.
They currently own 1 BTL and are looking to increase their portfolio.
They will be buying the properties in joint names, using mortgages secured through his high earnings.
Are we able to split the beneficial interest in the property 99/1 in favour of the wife without changing the ownership structure of the properties?
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Replies (6)
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Yes you're. For peace of mind have a read of this case Lawson v HMRC TC01206 as well.
Edit: posting the link triggers the spam filter!!!!!!!!
I'm not sure I agree with either response...
... but that's because I don't know what you mean by "without changing the ownership of the properties".
You have said that the properties will be purchased in joint names, such that there is joint legal ownership. I'm not, therefore, sure that the point in Lawson is necessarily at issue.
That being the case, you are within ITA 2007, s 836 and the spouses are taxable on a 50:50 basis, regardless of their beneficial ownership, unless they can and do make an election under s 837 using form 17.
If you mean can they split income in different proportions to their beneficial ownership using a s 837 election, then I do agree with Tim; the legislation says that the two must marry.
If you mean do you need to register the different interests with land registry so that the legal interests are the same as the beneficial interests, then the answer is no.
Land registry simply shows who the owners are, and they are presumed to be own the property as joint tenants by default. If there is a trust conferring differing beneficial interests (which needs to be in writing to be effective), that may or may not be registered.
Thanks for your response.
Steve, apologies for not being clear.
The property will be owned jointly. Yes I mean can they split interest in a way that isn't 50:50.
What would the process be to enable this? You mention a trust?
Take a look...
... at TSEM9851 and the pages that it links to. The solicitors should be able to deal with all this when the properties are purchased. Their shares in the income, on which they will be taxable, need to match their shares in the underlying benefical ownership.