Where property is owned jointly it is possible to divert income from a high rate taxpayer to a low rate taxpayer without necessarily giving up the beneficial interest in the underlying property.
Between husband and wife and civil partners a simple transfer of legal title into joint names, with no change in the beneficial interest will mean that the rental income is automatically split 50:50 for tax purposes between the spouses (s.836 ITA 2007). If a different split of income is required then the beneficial interest must be held in the same proportion as the desired split of income and a joint declaration under s.837 sent to HMRC.
For non-spouses the situation is different. Where there is any beneficial joint ownership (for example 99:1) this gives an opportunity for the rental income to be split in whatever proportion the owners agree between themselves. So if a taxpaying grandparent for example owns a rental property and wishes to pass income to grandchild in a tax effective way without transferring assets they could give a 1% beneficial interest (covered by annual CGT exemption) and agree to split the income however they wish, even as much as 99% to the grandchild. This could form the basis of some useful late planning for school fees for example.