Legal News | 26.06.25
Income and jointly owned property
| In the recent case of Alison Moss v HMRC [2025] TC09535, a taxpayer was found to be solely taxable on income arising from a property which she jointly owned with her estranged husband. The facts are specific to the case but the judgment serves as a reminder of the potential tax pitfalls (and opportunities) when it comes to income from jointly held property. Property can be held jointly in one of two ways: either as joint tenants or tenants in common (see our previous article on this here). When property is held as tenants in common, it is possible for the joint owners to have unequal shares in the property. Where the co-owners are not married or in a civil partnership, any income arising from that property will usually be taxed on each owner according to their underlying shares. However, when it comes to couples who are married/in a civil partnership, the rules are different. If the couple are living together, income arising from a property is deemed for income tax purposes to be split 50:50 between the couple. This is regardless of the actual underlying ownership. It is, however, open to married couples (or those in a civil partnership) with jointly held property to make an election to HMRC to be taxed in line with their actual shares. They can do this by submitting a ‘Form 17’ to HMRC, together with evidence of the unequal ownership of the property. This can be particularly useful when one partner pays a higher rate of income tax than the other. By allocating more of the property’s income to the lower-earning spouse, it may be possible to reduce the overall income tax burden of the couple. There will be wider factors to consider but this may present married couples/civil partners owning rental properties with an opportunity for tax planning. If you would like more information about this topic, please contact the Private Client team at wealth@wansbroughs.com |
