Question:
I jointly own property with my sister 50:50. As a higher earner and less in need of the income than her, can I assign the rental income for a year to her rather than me to help her out? I do not propose this being any alteration in the 50:50 ownership and this is for a set period of time not permanent, and on the income earned only. Can I do that without any further consequences, e.g. capital gains tax or anti avoidance income tax or anything else I don’t know about?
Arthur Weller replies:
If you look at www.gov.uk/hmrc-internal-manuals/trusts-settlements-and-estates-manual/tsem9310 you can see that rental income is taxed on the person who is entitled to and actually receives the income. If you look at www.gov.uk/hmrc-internal-manuals/property-income-manual/pim1030 you can see that joint owners of a rental property can agree a division of profits that is in a different proportion to the actual ownership of the property. So you and your sister could draw up a document assigning more than 50% of the rental income to her. Make sure that this actually goes into a bank account in her name.
