Tax problems on couple's buy-to-let property
There is a possibility that, as currently drafted, the new income shifting provision could affect an individual who transfers ownership of half of a property together with the rent generated to a spouse or partner. If so, for tax purposes, all the rent will be taxed on the first individual. Under the new provisions the status of the couple is irrelevant.
The draft legislation “Income shifting: a consultation on draft legislation” does not restrict the rules to trading income; it refers to “distributions of a company, or profits of a partnership”.
Neither the draft legislation nor the draft guidance from HMRC state that buy-to-let partnerships are excluded. The examples given refer to “businesses”, but with rental income increasingly being taxed on a business footing (rental income is now taxed as income from a “property business”) there is a danger that the provisions could apply.
Neither the draft legislation nor the draft guidance from HMRC state that buy-to-let partnerships are excluded. The examples given refer to “businesses”, but with rental income increasingly being taxed on a business footing (rental income is now taxed as income from a “property business”) there is a danger that the provisions could apply.
