Lee Sharpe looks at the special rules that HMRC uses to counteract transferring property rental income to spouses and civil partners.
Moving income or income-producing assets from a high taxpaying individual to a close family member, who pays tax at lower rates is generally considered sound tax planning – at least from an income tax perspective.
However, ever since then-Chancellor Norman Lamont uttered the fateful words that couples transferring assets between themselves “was an inevitable and acceptable consequence of taxing [spouses and civil partners] separately”, HMRC has been doing its level best to prove him wrong.
Splitting property income
In its Property Income manual, HMRC states (at PIM1030):
“Where there is no
