Business News
Sharing the load on tax
If you are living with a husband, wife or civil partner, or indeed tenants-in-common where property is concerned, it may be time for a review of your assets and how they can be coordinated to reduce tax within this household.
With the tax threshold of 40% coming down year on year (for 2011/12 it’s at £35,000 after deducting allowances), there could be savings made if assets could be transferred within the household or if sole ownership of property for example were to become joint. The advantages of joint ownership are that you do not incur a capital gains tax at the time of transfer, and for 2011/12 on sale of the property, exemptions of £10,600 each could be available to reduce chargeable gain.
As tenants-in-common, where the individuals hold separate identifiable shares in the property – for example 80% and 20% - the tax is calculated on your share; as a married couple the property would be split 50:50 for tax purposes whether this be the case or not. If a husband, wife or civil partner wish is to be taxed as per the share held in the property, such as the 80:20 split, then one must sign the Form 17 to be submitted to HMRC for review. This requires evidence as to the benefit this split would bring to each person such as deeds or purchase documents, which is a new element to Form 17 since it has been reissued.
