I own a rental property with my parent in 50:50 shares as tenants-in-common. When I return to work after a maternity break, I will be a higher-rate taxpayer. My parent is a basic-rate taxpayer. Can we allocate the rental income differently (e.g., 25/75), so that my parent can be taxed on more rental income in their basic rate band than me? Do we have to change the beneficial ownership of the property to 25/75 and do a declaration of trust and Form 17? My income might change from year to year because I am a contractor. Can we change the allocation of rental income year by year? 

Arthur Weller replies 

Even though a property is owned 50:50 between A and B, they can agree to split the rental income in a different proportion. You do not need to change the beneficial ownership; you do not need to do any declaration of trust, and Form 17 is certainly not applicable. Preferably, you should have a written agreement between you. If A is to receive 25% and B is to receive 75%, then 25% of the rental income should go to A's personal bank account and 75% to B's personal bank account. It is possible to change the agreement year by year.