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Where Taxpayers and Advisers Meet

Who needs to pay tax

UKtrader
Posts: 13
Joined: Sat Sep 16, 2017 9:20 pm

Who needs to pay tax

Postby UKtrader » Fri Feb 02, 2018 8:53 pm

Hello, me and my wife are willing to buy our first home a 3/4 bed house (60% mortgage/40% Deposit our saving ) but I thought the best way to invest the money is to buy a small flat to rent out, the rent will pay 70% of our mortgage. I am a sole trader with a turn over under £85,000 a year, I don't want to go over the VAT threshold if I receive a second income, My question is can my wife (housewife) pay tax from the small flat earnings without affecting my business? if yes is there any conditions such as does the small flat has to be on her name/my name or it doesn't matter who own the property? Your help is very appreciated. Thank you

KarenFa
Posts: 7
Joined: Tue Jan 22, 2013 3:46 pm

Re: Who needs to pay tax

Postby KarenFa » Sat Feb 03, 2018 1:09 am

Yes, I think I know the answer to this (but am not an accountant or tax professional). You can buy together in joint names, with a joint mortgage, but ask your solicitor to put you down as tenants in common rather than joint tenants in terms of ownership structure. Then do a trust deed in which your wife gets 99% and you 1% of the beneficial ownership. Then send a copy of this together with Form 17 to HMRC. Your wife will now get 99% of the income, and you 1%. If she has no other income, or very little income, there won't be a lot of tax for her to pay, and you will pay tax on only 1% of the rental income.

If you don't trust your wife, you should buy within the structure of a limited company.

UKtrader
Posts: 13
Joined: Sat Sep 16, 2017 9:20 pm

Re: Who needs to pay tax

Postby UKtrader » Sat Feb 03, 2018 1:29 pm

Your answer is very helpful Thank you very much have a nice weekend

spidersong
Posts: 352
Joined: Wed Aug 06, 2008 4:05 pm

Re: Who needs to pay tax

Postby spidersong » Tue Feb 20, 2018 11:20 am

It's probably also worth pointing out that if it's a domestic rental then renting out of living accommodation is exempt from VAT and so wouldn't count towards the VAT registration threshold anyway. If you were renting it out as holiday accommodation then it would though.


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