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Income Tax Planning for Husband and Wife

Our client has a large property portfolio, jointly owned with his wife.  He also employed with a very successful catering company, earning a salary that places him in the higher rate tax bracket. He was concerned about the mortgage interest restriction, and how this impacted his net income from 2017/18 to 2020/21.

How we helped our client

We prepared a four-year summary for our client showing the tax implications of the mortgage interest restriction over this period, and how this would affect his net income based on his projected circumstances.

Our client asked us to look at the implications of him giving up work and transferring the full ownership of the properties to himself, with his wife continued to work. Again, we looked at four-year projections comparing this to the projected net income of his current situation.

Whilst the client’s net income would be less if he stops working, he would be paying a lower marginal rate of tax. His overall net income, when considering the mortgage interest relief available would be acceptable to the client.  This move would also allow our client to focus on expanding and streamlining his property portfolio.

As well as looking at the husband’s position, we needed to consider his wife’s tax affairs to ensure the decision, collectively, maximised tax efficiency.

For more information or to discuss further, please contact the Private Client Taxperts.

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