Do we need to fill in self assessment forms?

[Miffy]

Due to a fair bit of bad debt this last tax year (making us wonder whether we should just sell up-but that's another story!) it is quite possible that we will make a LOSS when I have finished working it all out. If not, then my wife's 99.9% share of the income will certainly be under her personal allowance and my share will be under £1!!!

Are we legally required to fill in self assessment forms if the tax is zero or a matter of pence?

[TaxationPete]

If you have filed before for rental income then they will send you a SA and you have to complete. I would always recommend completing a SA if you are renting a property to provide seamless declaration even in a loss situation. Regards Peter

[steveandbee]

Due to a fair bit of bad debt this last tax year (making us wonder whether we should just sell up-but that's another story!) it is quite possible that we will make a LOSS when I have finished working it all out. If not, then my wife's 99.9% share of the income will certainly be under her personal allowance and my share will be under £1!!!

Are we legally required to fill in self assessment forms if the tax is zero or a matter of pence?

I'm still not sure about owing the property by a large proportion (e.g. 99.9%). When I enquired with an accountant that if I were to have 99% of the rented property in my wife's name he said that the rent will still be taxed 50/50. So we just decided to have the property in her name only. So was I given incorrect information?

I'm a newbie so please excuse the ignorance!

[TaxationPete]

Yes the information given was either incorrect or you misunderstood and putting the property in her name only was a bad idea although recoverable as you have lost your £9,200 CG allowance on that property. If you joint/ TinC own a property the rental income can be apportioned by an HMRC Form 60 within 60 days or be a deed of declaration or deed of variance under various description. This can apportion rental income for IT purposes from 99:1 to 1:99 Miffy's 99.9% I do not think would be accepted and totally unnecessary.

Read http://www.landlordzone.co.uk/forums/showthread.php?t=5999

I suggest you look into this and place your name back on the deed.

Regards

Peter

[steveandbee]

Thanks for the information Peter. The property has no mortgage and we're not really intending to sell it unless we're in dire straits. We've decided that if we were to sell then we'll put my name back on the deed then. I believe this is OK.

Other than not having any GCT allowance if we sell now I'm not loosing out on anything right? It cost about £300 put have my name remove from the deed and I'd rather not spend another £300 unless I have to.

Curse that accountant :mad: I specifically asked him about this. I even asked if the deed was 1% in my name will the IT on the rent be split evenly or proportionately and he said evenly. I get better advice here!

[TaxationPete]

The land registry offer an online form sevice and replacement deed I think for £61. At present the property is not yours at all and if your estate is great than say 400K then your really should address the issue of ownership and IHT efficient wills. Regards Peter

[jeffrey]

There are no LR fees set at £61. How did you get this odd amount?

[TaxationPete]

I'll check Jeffrey. I did say I think.

Regards

Peter

[Miffy]

Miffy's 99.9% I do not think would be accepted and totally unnecessary.

Not trying to be funny (so please don't take it that way!) but why should 99% be accepted and not 99.9%? Its still dodging the tax one way or another and a large skew to one partner over the other. It would seem totally arbitrary to allow 99 but not 99.9! I could always transfer the whole asset to my wife instead.


We've decided that if we were to sell then we'll put my name back on the deed then. I believe this is OK.
According to Taxaccountant on the other thread, yes it is OK. (Hope so ;-)


Other than not having any GCT allowance if we sell now I'm not loosing out on anything right? It cost about £300 put have my name remove from the deed and I'd rather not spend another £300 unless I have to.

On the face of it I wouldn't say you are and based on Pete's worry that HMRC might not accept my deed of variance I am wondering if I too should have put the properties in my wife's name only! (Moving them back to 50/50 or whatever prior to sale for the cgt allowance, of course).

The only thing that I (as a layman) can see is the possible loss of tax efficiency in your will that Pete alluded to. Not having your name on the rental property (as a tenant in common, mind, NOT joint tenant I believe) means you don't have any share of it to put into a "nil-rate band discretionary trust" (basically a way of protecting some of your estate from IHT for the kids). I think I am in that position too though, with the deed of variance, as this also apportions proceeds. I have been looking into this issue a bit and unless I want to put the rental property back into more evenly held shares, the only other way of getting round this seemed to me to be putting more of the main home in my name (as tenants in common, again). Pete and Ramnik may put me right here again, of course!

You are right about the advice! Thanks once again, particularly to Pete and Ramnik, for their advice and debate on the esoteric subject of tax!

[TaxationPete]

Let me clear this up. If you both own the property you both get your GC allowance should you sell it. If you are married then a Form 17 can apportion the Income between husand and Wife ( not partners ) I you have lived in the property as your PPR you get dual Letting Relief so potentially up to £80,000. Regards Peter

[steveandbee]

I have no idea (naive really I know) that the Taxman is so keen to get a share of your money. Thanks to Peter I've been looking into the discretionary trust funds to protect IH as mentioned by Miffy. I've even spoken to my mother (no financial expert but full of common sense!) about this as she has left her home to myself and my brother by putting her deed in our names many years ago. She was asking surely no IH is required in this situation? So if I did the same thing and put our childrens names on the deed when it's approiate (i.e. they have left home, married, have kids, good spouses etc...) then the Taxman will not get any IT from me right?

Or am I being extra thick today :confused:

[TaxationPete]

Your Mum's house being in your names places a CGT liability on you for the rise in value from the date of the Gift 'PET' and the full value of the property will remain in her estate for the purposes of any future IHT calculations. If her total estate minus the successfull PET's i.e 7 yeras old, worth exceeds the NRB then the will be a IHT charge. I assure you that as your Mum has continued to live in the property and have full benefit of it without paying a marker rent for it then it stays in her estate, ALL OF IT. NRB DT's work if both spouses are alive when all the paperwork has benn put in place. No not put your kids on your deed, use a specific NRB Trust Will. Do not dip you toe in the water unless you can swim. This take a well versed IHT practitioner/ solicitor to get this right. Regards Peter