{"id":190,"date":"2019-05-29T13:00:08","date_gmt":"2019-05-29T12:00:08","guid":{"rendered":"https:\/\/taxfix.com\/en-uk\/?p=190"},"modified":"2025-02-20T15:14:57","modified_gmt":"2025-02-20T15:14:57","slug":"rental-income-tax-joint-ownership-property","status":"publish","type":"post","link":"https:\/\/taxfix.com\/en-uk\/landlord-tax-returns\/rental-income-tax-joint-ownership-property\/","title":{"rendered":"How to pay rental income tax from jointly owned property"},"content":{"rendered":"\n<p>If a property has several owners, HMRC will expect each partner to do the following things:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Keep records<\/li>\n\n\n\n<li>File separate Self Assessment tax returns<\/li>\n\n\n\n<li>Pay tax on their share of the income<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">How much tax does each partner pay?<\/h2>\n\n\n\n<p>If you\u2019re not married it&#8217;s simple.<\/p>\n\n\n\n<p>Your share&nbsp;of the rental profits will be based on&nbsp;the percentage of the property you own.<\/p>\n\n\n\n<p>For example:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Lucy and Daniel are dating and invest in a flat together<\/li>\n\n\n\n<li>Lucy puts 70% of the money and Daniel the remaining 30%<\/li>\n\n\n\n<li>They then rent out the flat<\/li>\n\n\n\n<li>Daniel will receive 30% of the income and Lucy 70%<\/li>\n\n\n\n<li>They <a href=\"\/en-uk\/tax-on-rental-income\/\">will pay tax accordingly<\/a><\/li>\n<\/ul>\n\n\n\n<p>If you\u2019re married or in a  <a href=\"\/en-uk\/glossary\/civil-partnership\/\">civil partnership<\/a>, things are a little different.<\/p>\n\n\n\n<p>Rental income must be split and taxed equally (50:50).<\/p>\n\n\n\n<p>HMRC does not care whose bank account the rent money goes into &#8211;&nbsp;each spouse is assumed to have receive 50%.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Should we choose a different split?<\/h2>\n\n\n\n<p>It depends on your situation. It could be something to consider if:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>You are in&nbsp;<a href=\"\/en-uk\/income-tax-rates-in-the-uk\/\">different Income Tax bands<\/a>&nbsp;&#8211; you could have most of the rental income taxed at a better rate<\/li>\n\n\n\n<li>One of you is a stay-at-home spouse &#8211; you could use your&nbsp;<a href=\"https:\/\/taxfix.com\/en-uk\/glossary\/personal-allowance\/\">Personal Allowance<\/a>&nbsp;to save more on tax<\/li>\n<\/ul>\n\n\n<\/div> <!-- .c-body -->\n\n<div class=\"b-highlight-mini m-neutral m-align-left\">\n    <div class=\"b-block-body\">\n        <p><span style=\"font-weight: 400;\">The <\/span><b>income tax<\/b><span style=\"font-weight: 400;\"> rates in the 2025\/26 tax year \ud83d\udc47<\/span><\/p>\n<table>\n<tbody>\n<tr>\n<td><strong>Income<\/strong><\/td>\n<td><strong>Tax rate<\/strong><\/td>\n<td><strong>Tax band<\/strong><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Up to \u00a312,570<\/span><\/td>\n<td><span style=\"font-weight: 400;\">0%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Personal allowance<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">\u00a312,571 to \u00a350,270<\/span><\/td>\n<td><span style=\"font-weight: 400;\">20%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Basic rate<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">\u00a350,271 to \u00a3125,140<\/span><\/td>\n<td><span style=\"font-weight: 400;\">40%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Higher rate<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">over \u00a3125,141<\/span><\/td>\n<td><span style=\"font-weight: 400;\">45%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Additional rate<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n    <\/div>\n<\/div> <!-- .b-highlight-mini -->\n\n<div class=\"c-body\">\n\n\n\n\n\n<h2 class=\"wp-block-heading\">How do we choose a different split?<\/h2>\n\n\n\n<p>If you&#8217;re not married:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li>Ask a lawyer to draft a&nbsp;<strong>Severance of Joint Ownership<\/strong><\/li>\n\n\n\n<li>File this with the&nbsp;<strong>Land Registry<\/strong><\/li>\n\n\n\n<li>You don&#8217;t need to file anything else with HMRC<\/li>\n\n\n\n<li>Just use the new percentages in your next Self Assessment tax return<\/li>\n<\/ol>\n\n\n\n<p>If you&#8217;re married or in a civil partnership:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li>Ask a lawyer to draft a&nbsp;<strong>Declaration of Trust<\/strong><\/li>\n\n\n\n<li><a href=\"https:\/\/www.gov.uk\/government\/publications\/income-tax-declaration-of-beneficial-interests-in-joint-property-and-income-17\" target=\"_blank\" rel=\"noreferrer noopener\">Complete a Form 17<\/a><\/li>\n\n\n\n<li>File the form with the HMRC within two months<\/li>\n\n\n\n<li>HMRC will tax rental profits and gains based on the new split<\/li>\n<\/ol>\n\n\n\n<h2 class=\"wp-block-heading\">How much does it cost to do it?<\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>A Declaration of Trust or Severance of Joint Ownership is about ~\u00a3200 + VAT<\/li>\n\n\n\n<li>If you have a mortgage on the property, you might need to pay a&nbsp;<a href=\"\/en-uk\/landlords-list-of-taxes\">Stamp Duty Land Tax charge<\/a><\/li>\n\n\n\n<li>If unmarried couples transfer a share in a home, this triggers&nbsp;<a href=\"\/en-uk\/capital-gains-tax-on-gifted-property\/\">Capital Gains Tax<\/a><\/li>\n\n\n\n<li>Luckily there is&nbsp;<strong>no CGT on transfers between spouses<\/strong><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">What happens when we sell the property?<\/h2>\n\n\n\n<p>When married couples file a Declaration of Trust and Form 17,&nbsp;they are not transferring legal title to the property.<\/p>\n\n\n\n<p>That&#8217;s why&nbsp;when you sell the property, you should reverse the process. Here&#8217;s how. <\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li>Assign 50% of the beneficial interest back to you<\/li>\n\n\n\n<li>File Form 17 again<\/li>\n\n\n\n<li>Then both of you can use your&nbsp;<a href=\"\/en-uk\/capital-gains-tax-on-property\/\">CGT tax-free allowances<\/a><\/li>\n<\/ol>\n\n\n\n<p><\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio\"><div class=\"wp-block-embed__wrapper\">\n<div class=\"embed-container\"><iframe loading=\"lazy\" title=\"Tax in 10(ish) seconds - what&#039;s a landlord?\" width=\"500\" height=\"281\" src=\"https:\/\/www.youtube.com\/embed\/DooX5wdaBqw?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe><\/div>\n<\/div><\/figure>\n","protected":false},"excerpt":{"rendered":"<p>If a property has several owners, HMRC will expect each partner to do the following things: How much tax does each partner pay? If you\u2019re not married it&#8217;s simple. Your share&nbsp;of the rental profits will be based on&nbsp;the percentage of the property you own. For example: If you\u2019re married or in a civil partnership, things [&hellip;]<\/p>\n","protected":false},"author":9,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[455,452],"tags":[421],"class_list":["post-190","post","type-post","status-publish","format-standard","hentry","category-co-owning-property","category-landlord-tax-returns","tag-property"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.8 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>How to pay rental income tax from jointly owned property &#8211; Taxfix<\/title>\n<meta name=\"description\" content=\"Paying rental income tax from jointly owned property can be confusing, no matter your marital status. 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