New Forest


Tax on property jointly held by spouses or civil partners

This factsheet explores the tax implications of property being jointly owned by spouses or those in a civil partnership.

The ’50/50′ Rule

When property is jointly owned by spouses or civil partners, the income from that property is treated for tax purposes as if the property were owned in equal shares. This applies even if the individuals actually own the property in unequal shares. This treatment can be disapplied by a declaration on Form 17 (see below).

The ’50/50′ rule does not apply in the following circumstances:

  • The income is from furnished holiday lettings (FHLs);
  • The income is from a partnership, in which case the income is split according to the partnership agreement; or
  • The income is subject to a Form 17 declaration (see below).

The Form 17 Rule

Spouses and civil partners can request to be taxed on their beneficial entitlement to income from jointly held property. They do this by declaring their unequal interest in the property on Form 17. This only applies to property held as tenants in common and not joint tenancy properties.

A Form 17 declaration is made jointly; if one spouse or civil partner does not wish to make a Form 17 declaration, both must accept the standard 50/50 split. Only spouses and civil partners who live together can make a Form 17 declaration.

The couple should submit evidence of the actual beneficial ownership when they submit Form 17. This is commonly done by sending in a valid declaration of trust.

Once a declaration is made, it remains in force until the couple’s interests in the property or income change.

Why complete a Form 17

Making this declaration can have the following tax advantages:

  • If a couple (married or civil partners) own a property 50-50 it may not be income tax efficient to tax the rental profits equally if one of the spouses is paying tax at a higher rate than the other. By making this declaration it can reduce the combined tax bill so that the income is taxed in a greater proportion on the spouse with the lower tax band.
  • An individual’s personal allowance is reduced when their taxable income is over £100,000. By making this transfer it can help preserve this allowance for the spouse whose income is over this level.
  • When the spouses look to sell the property a Capital Gains Tax saving may be achieved. This would be the case if one spouse has brought forward capital losses and the other does not, or one spouse’s share of the gain would be taxed at the basic rate instead of the higher rate.

For further information on the Form 17 declaration or on any other personal tax services, please contact us on 023 8046 1200 and ask to speak to a member of our tax team.

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