How does this sale impact on each of our tax liabilities?

Question What is the tax treatment for property 'trading stock' when it is sold if the property isn't fully owned by the property trader? I am a sole trader who has worked for two years on a property bought (jointly with my wife) with the intention of renovating it and selling for a profit. I understand that the profit coming to me will be liable to income tax. However, if 50% of the property is owned by my wife (who has only helped out with the work only a handful of hours per week on average), how does this impact on each of our tax liabilities?

Arthur Weller replies.
It seems that you have a partnership here. In a regular partnership the income split is the same as the capital split. But if you look at HMRC’s Business Income manual (at www.gov.uk/hmrc-internal-manuals/business-income-manual/bim82055), you can see that (at the right time) you can change the entitlement to income profits, so that it is different to the capital split.