Putting house into husbands name for tax reasons?

[Hellenabe]

Thankfully not for me but a friend is debating this as she's on a higher tax bracket. Could anyone offer any thoughts? He doesn't work much, they have children

@TizerorFizz “So lying about your income, not declaring dividends etc.“

I thought that was tax evasion not tax avoidance.

@Christmascracker0 ah so tax efficiency is using the rules as intended but tax avoidance, whilst not illegal, is using loop holes.

So you get Child Benefit and earn £55k but choose to put £5k extra into your pension so you don’t repay the CB. Is that an efficient use of the rules or using a loop hole?

This is what it boils down to.

“piedbeauty · Today 10:38
Your friend needs to pay for proper legal advice on this.”

@Foreversearch You just know there’s a difference between lying deliberately and using the legal tax rules as best you can. Why are you so obsessed with this? Most people cannot put extra every year into a pension. If they can, great.

Any accountant would work out the adjusted net income regarding taxation on the benefit, or not.

@TizerorFizz I’m not obsessed I’ve just never had anyone tell me that tax avoidance and tax efficiency are different things and I find I learn and understand better with specific examples. Hence my questions.

Actually “evasion” is the illeagal one. Avoidance uses efficient measures that are level to reduce tax liability. So essentially legal vs not legal. There’s also the “careless” category that caused Nadhim Zahawi to pay a penalty. So black, white and shades of grey.

@TizerorFizz thank you that was my understanding

• Evasion = illegal I. e. lying, not following rules etc.

• Avoidance = legal I.e. maximising the rules to reduce tax liability. May not use the rules as intended.

However, @Christmascracker0 introduced a 3rd concept

• Efficient = legal and better than avoidance I.e. using the rules as intended.

What I’m struggling with is the subtle difference between “Avoidance” and “Efficient”.

That’s why I used the child benefit example - the rules were originally designed to allow people to pay into a pension and pay less tax (efficient) but has the [unintended(?)] consequence of reducing taxable salary below the threshold to repay Child Benefit - is this using the rules as intended or not I.e. efficiency or avoidance? Both being legal.

Nadhim Zahawi = I would get deleted if I said what I think!

Tax efficiency is paying the least you need to pay.

I’m sorry I thought if you are married its property together. The tax automatically go to the high earner tax bracket?. Or am i wrong here?

the property could be split many ways she could reduce her share to the amount she put in as a deposit , if she put in 30% and then owns 30% only 30% of rent will be on her taxable income , the DH will use the 70% of rent against his personal allowance so if rent is 1400, he earns £1000 a month 12,000 a year therefore no tax, she earns £400 a month so 4800 is taxable so it lowers her tax bill but she still retains ownership of her part of the property, even if she only retained 10% share it still can't be sold without her consent
as a martial asset it would be generally assumed 50/50 ownership or benefit in the case of a divorce even if in her sole name, so the 50% of rent that is notionally her DH's would be tax free which legally reduces the burden this is common sense that he uses his tax allowance to offset his half that is not avoidance but efficiency

It depends on who legally owns it. People are taxed individually. So if jointly owned it's taxed 50/50 on husband and wife. If 100% owned by either it is taxed fully on that person.

It's a really common tax planning tool to have the property owned in the most tax efficient way.

"So you get Child Benefit and earn £55k but choose to put £5k extra into your pension so you don’t repay the CB. Is that an efficient use of the rules or using a loop hole?"

It's efficient use of the rules not a loophole. Using pensions as well as charitable giving by gift aid are common tools to reduce overall tax in several different scenarios It is essentially a way to encourage both saving into a pension (for these who can afford it) and for charitable giving.

@tigger1001 thank you.

This is what we did and I thought was common practice. Our rental property is in my name and the mortgage on it is solely mine. I work part time and as a result am in a lower tax bracket, the rental income is declared as mine and I pay tax on it accordingly.