Proposed tax changes could hit buy-to-let couples

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Couples who own a portfolio of residential lettings could be hit by government plans to change the law regarding taxing family-owned businesses, an expert has warned.

Proposed legislation aimed at preventing couples from splitting their income to avoid tax could affect buy-to-let couples, claimed Peter Penneycard, tax partner at PKF.

He told Accountancy Age that the new rules could apply to couples who transfer property to a spouse but find that the original owner finds the rental yield is taxed as their income and not that of the new 'owner'.

"Neither the draft legislation nor the draft guidance from HM Revenue and Customs state that buy-to-let partnerships are excluded from the new rules," he explained.

"If the government intends to catch what is a fairly common practice among couples letting properties, it will justifiably be accused of introducing another stealth tax," he added.

Earlier this year the Treasury announced it planned to cut down on income-splitting, claiming couples are dividing profits made by one person between the two of them to take advantage of tax free allowances and lower taxation rates.

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