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 Buy-To-Let Property & Deed of Trust

Jointly Owned Buy-To-Let Property & Deed of Trust

The Basic Rule

According to Income Tax Act 2007 (ITA2007/S836), where the property is held in joint names of husband and wife, each spouse is treated as beneficial entitled to the income in equal shares e.g. 50:50 for income tax purposes.

Tax Planning

We act for several buy-to-let investors who are married or in civil partnerships and require a more tax efficient way for allocating income between themselves especially when one spouse is a higher rate tax payer and the other half is a lower rate tax payer. Purchasing a property in joint names usually takes in the form of either ‘tenants in common’ or ‘joint tenants’.

Tenants in Common

As tenants in common:

  • you can own different shares of the property
  • the property doesn’t automatically go to the other owners if you die
  • you can pass on your share of the property in your will

With tenants in common each owns a set share - this can either be half each, or a defined percentage e.g. 90:10. Typically the larger share owned by the lower-rate tax payer, then both the income and capital follow the proportion.

Generally, HM Revenue & Customs treats income from a property that is owned jointly by a married couple or civil partners as if it belongs to each spouse or civil partners in equal  shares and each spouse or partner is taxed on half the income even if the property is owned in unequal shares.

Joint tenants

As joint tenants (sometimes called ‘beneficial joint tenants’):

  • you have equal rights to the whole property
  • the property automatically goes to the other owners if you die
  • you can’t pass on your ownership of the property in your will

Where property is held in joint names; it is presumed to be held beneficially as joint tenants where partners are taxed on a 50: 50 split.

However, presumption can be displaced by evidence to the contrary, such as:

  • The income is from furnished holiday lettings;
  • There is actually a partnership in which case the income is divided according to the terms of the partnership agreement;
  • A declaration of trust/ deed of trust of equal or unequal shares where both owners, sign a declaration stating their beneficial interests in both the property and the income arising from it;
  • Notice of severance of the joint tenancy by one of the joint owners

Planning Points

According to Trust, settlements and Estate Manuals (TSEM9842), married couples and civil partners can, in certain circumstances, ask to be taxed on their actual entitlement to income from jointly held property. They do this by making a joint declaration of unequal beneficial interests for example declaration of trust or deed of trust.

Declaration of beneficial Interests in joint property and income (Form 17) must then be submitted to HMRC within 60 days of the date it was signed. The evidence that you need to provide when you submit Form 17 to HMRC is either a declaration of trust/deed of trust or a copy of the land registry entry.

However, if the shares are equal, where a husband and wife or civil partners own property as beneficial joint tenants, there would be no possibility of a declaration on form 17 for tax purposes; hence Form 17 declaration can only be made if the individuals are beneficially entitled to the income in unequal shares. A   declaration is only valid if their interests in the income and in the property itself correspond.

Once a Form 17 is in place the income will be split based on the declaration until:

  • The couple separate or divorce
  • The beneficial interest of the spouse/civil partner changes

Affordable Pay-monthly Packages

We offer a full range of services to limited companies, solo trader, partnership, charity, LLP, CIC as well as individuals. We have arranged our services into easy to choose packages that suit your needs.

Start-up
£ 50  / Month (+VAT)

This price plan is suitable for the start-up companies who are not VAT registered.

  • Year-end accounts preparation and submission
  • Corporation Tax returns
  • Payroll & RTI submission for 1 employee
  • Personal tax return [salary & dividends income only] (Free)*
  • File confirmation statement (annual return) with Companies House
  • Reference letters for Director only (Free)*
  • Assisting with correspondence from HMRC and Companies House
  • Unlimited face to face advice and email support
  • 1 Director
  • 1 Shareholder
  • Annual turnover should be less than 80K
Limited Company
£ 100  / Month (+VAT)

This price plan is suitable for the companies who are VAT registered and turnover is less than 100K with a couple of employees.

  • Year-end accounts preparation and submission
  • Corporation Tax returns
  • Monthly payroll including RTI submission for up to 2 employees
  • Personal tax return [salary & dividends income only] (Free)*
  • File confirmation statement (annual return) with Companies House
  • Reference letters for Director only (Free)*
  • MTD VAT returns submissions – quarterly
  • Unlimited face to face advice and email support
  • 1 Director
  • 1 Shareholder
  • Annual turnover should be less than 100K
Company Pro
£ 150  / Month (+VAT)

This price plan is suitable for the companies who are VAT registered; turnovers are more than 100K and have 2 directors and shareholders.

  • Company formation (if required)
  • Year-end accounts preparation and submission
  • Corporation Tax returns
  • Monthly payroll including RTI submission for up to 5 employees (Free)
  • MTD VAT returns submissions – quarterly
  • Personal tax return [salary & dividends income only] (Free)*
  • File confirmation statement (annual return) with Companies House
  • Reference letters for Director only (Free)*
  • Unlimited face to face advice and email support
  • 2 Directors
  • 2 Shareholders
  • Annual turnover should be less than 200K
Company Premium
Let's talk.  / 

This bespoke price plan is suitable for the companies who are VAT registered, with more directors, shareholders and employees. Also, annual turnover is more than 200k and requires further bespoke services.

  • Company formation
  • Year-end accounts preparation and submission
  • Corporation Tax returns
  • Monthly payroll including RTI submission all employees
  • MTD VAT returns submissions – quarterly
  • Personal tax return [salary & dividends income only] (Free)*
  • File confirmation statement (annual return) with Companies House
  • Reference letters for the all Directors (Free)*
  • Unlimited face to face advice and email support
  • Flexible and can be discussed
  • Annual turnover should be more than 200K

Add on Services

  1. Personal Tax Returns

    This price plan is suitable for self-employed individuals, landlords and those who need to submit Self-Assessment Tax Returns.

    If you need to submit the Self-Assessment Tax Return, we can offer you competitive prices starting from £150 + VAT. Price can vary according to your nature of income. Please contact us for more details.

  2. Tax Investigation
  3. Business Legal Support
  4. Company Formation
  5. Business Mentoring
  6. ARA accounting services for ATOL & ABTA travel companies

    Our commitment to you is that we’ll ensure all the information we’ve submitted to the Civil Aviation Authority is up-to-date and accurate. 

Taxcare Accountancy was formed to provide Small & Medium Businesses with an affordable, proactive and professional accountancy services…