I spoke with a chap yesterday who was trying desperately to move his property income around to save tax. He was one half of a husband and wife combo that had shares in their private trading company, a bunch of joint properties and one property owned just by him.
The shares in the business were held 80/20 in his favour and this problem was that he was hitting the higher rate threshold meaning that he had to heavily restrict the amount of money they took from the company. To try to compensate they had increased the salary portion of the monies taken from the business for his wife.
Even with just this information it was plain to see that there were some easy wins. First of all the salary is not as tax efficient as dividends are. Luckily transfers between husband and wife have almost no tax implications at all so moving more shares from him to his wife not only replaced the salary with an income tax more efficiently but also allows him to give her more that she had by using her spare basic rate allowances.
Next up for easy wins is his wife actually manages the property in his sole name. She will charge a management fee for that which shifts a couple of grand between them (remember her first £1,000 will not be taxed either!) saving £320 a year for minimal effort.
Finally next time the mortgage is up for renewal on the sole name property they will swap it in to joint names.
These simple shifts will allow both of them to take their income right up to the higher rate tax threshold with very little effort.
Equalisation of income between couples is one of the basic, but yet often overlooked, principles of tax planning.