Can DH pay me to manage a rental property?

[GenedlGymreig]

I am about to stop work and so will be earning no money. DH and I have a small house we rent out privately and every year we split the tax bill for this evenly (as DH and I earned a similar amount). If I am earning no money, can we use the rent from the house to pay me to manage it, thereby reducing the tax burden for DH? Is there any particular set up we need for the property to do this? We currently own it jointly.

You can arrange tax affairs to make it more tax efficient, but you don't need to create a 'job' to do it. If you have a mortgage on the rental property, it's best your DH has some ownership otherwise you won't be able to remortgage it to a better deal if you have 100% ownership. This is due to BTL lenders requiring the owner to have an income of at least £25k plus other criteria.

You can change the ownership to something like 95% you and 5% DH by setting up a 'tenancy in common'. A tenancy in common is specific form of ownership that allows for unequal shares in property. This means that you can legitimately receive 95% of the profit and DH would then only receive 5% of the profit and only pay income tax on that amount only.

If your share (95%) of the profit is less than £11.5k and you have no other income (some benefits are classed as income and some aren't) then you will not have a tax bill to pay. Your DH would only have to pay marginal income tax on the 5% profit and importantly his income from his job can be used in any remortgage application.

What happens if you just transfer some of his tax allowance to you?

The suggestion from cjm10979 is a good one. If you do that don’t forget to submit Form 17 to HMRC or the transfer will not be accepted for income tax by the Revenue.

My DD and her DH do what BalloonFlowers suggests. The rent from the flat they let out comes to her not him as she is the lower tax payer

Thank you cjm10979. I was worried that if we went down the Form 17 route, that is transfer of beneficial ownership, then it might create complications. I am no expert at all but are the following true? (I read them while trying to research this question). a) You have to pay stamp duty if you transfer the beneficial ownership.
b) The mortgage company has to give permission for the non-earning person (me) to be responsible for most of the mortgage.

I was hoping that by just charging a management fee to DH I could avoid all that.

BalloonFlowers We can do that but I think that comes to 238 pounds in total and the annual rent is quite a bit more than that.

I'm no expert, so you should consult a conveyancing solicitor and mortgage advisor to run it past them. However, on the HMRC website it says there is not charge to change from joint tenants to tenants in common.

www.gov.uk/joint-property-ownership