Not long before typing this I had a chat with a lady that was looking for answers on how to transfer a property she owned with her husband in to a limited company.
She was well into higher rate so was worried about her tax rates. Searching online via forums and the general chatter was that she should put the house in to a company. Problem is she has four years left on her mortgage deal and it’s not a cheap property so capital taxes and redemption fees would be costly.
As per usual I did a mini fact find and got to the bottom of things. I very much like to keep things simple wherever possible. Turns out that her husband is a basic rate taxpayer with sufficient space within the basic rate band to accommodate all of the rent.
Luckily we spoke and I told her about Form 17. This allows married couple to change the way rent is allocated between them. I did some outline numbers and the tax on her share of the income is £300 a month but her husband’s will only be £100 a month. For the sake of a trip to a solicitor to complete a declaration of trust and completing and submitting a form 17 this couple will save many thousands of initial costs in transferring to a company, many more thousands in unnecessary accountancy fees for a company they don’t need as £200 a month in tax!
Pretty good going I’d say!
K I S S