Form 17 Income Tax declaration of beneficial interest in joint property and income from SAM Conveyancing
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Form 17 Income Tax Declaration for Married Couples

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Form 17 Process to declare unequal shares in property
  • (if required) Sever joint tenancy to tenants in common
  • Execute a deed of trust (stating the unequal share of property income)
  • File a Form 17 with HMRC (within 60 days of the date of the deed)
  • Share future rental income in unequal shares
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The Income Tax Declaration Form is used by married and civil partnership couples who want to declare to HMRC unequal shares in a jointly owned property held as tenants in common. You only need to complete a declaration if you want to share property income unequally in a tax efficient way from a buy to let property. You don't need to complete it if you share property income 50/50. Make sure to read our Frequently Asked Questions that include what tax is due on transfers between spouses.

Under the Income Tax Act 2007 Section 836 it states:

Jointly held property
(1)This section applies if income arises from property held in the names of individuals—
  1. who are married to, or are civil partners of, each other, and
  2. who live together.
(2)The individuals are treated for income tax purposes as beneficially entitled to the income in equal shares.

Without a declaration HMRC assumes that any income generated from the jointly owned property, such as rent or capital gains, is shared equally (50/50). In cases where you own an unequal share of the beneficial interest in the property, you must complete a declaration and have a signed and witnessed Deed of Trust. If you currently hold the property as Joint Tenants read this article - Change from Joint Tenants to Tenants in Common for tax purposes.

You can't share capital gains in different shares to the rental income
You may want to share rental income in one share and then any profit for CGT in another way, however HMRC states,"A couple cannot make a declaration where the split of beneficial ownership of the asset and of the income from it differ. Nor do they have to make a declaration even if they are entitled to. So you should not take the absence of a declaration as being in itself evidence that the beneficial ownership is split evenly".

You can, however, draft a new deed of trust and file a new form as many times as you like and as such can do so just prior to completion of the sale of the property.

When should you complete a Form 17?

You should fill in a form if you:
  • are married or civil partnership couple;
  • own your property as tenants in common; and
  • own the property in unequal shares.

What happens if you haven't filed a Form 17?

The submission of a a form is essential in order to apply for an unequal split of profits from property as the recent case of Mr Deepak Koshal Mrs Minu Koshal v HMRC [2013] UKFTT 410 (TC) confirmed.

The case highlights how HMRC handles cases where spouses or civil partners look to share property income in unequal shares and don't declare the share in writing in a deed of trust or by filing a declaration. The ruling stated: "The review concluded that income from property held jointly by married couples and civil partners are treated as beneficially owned by the individuals in equal shares under ITA 2007 s.836. Consequently, the Appellants are taxable on income on a 50:50 basis. This rule applies even if the individuals own the property in unequal shares. It was pointed out that there were no signed declarations stating beneficial interest was held in any other way"

The case further confirms that the obligation to provide the correct information to the HMRC falls upon the tax payer under the self-assessment tax system:"It must be remembered, that it is the obligation of the taxpayer to make full disclosure under the self-assessment system"

When should you not complete a Form 17?

You should not fill in if:

  • you are not beneficially entitled to the property income
  • it is partnership income
  • it is income from commercial letting of furnished holiday accommodation
  • it is income from shares in a close company
  • it is income which for tax purposes is treated as income of a third party, even if the income arises from property held in your joint names
  • it is property held in your joint names
  • property held as beneficial joint tenants where you are both jointly entitled to the whole of the property and income
  • property that is not held in unequal shares (you cannot choose to have the income taxed on an unequal basis because you think it would be to your advantage).

HMRC would normally tax you equally on the jointly owned property income regardless of your actual beneficial ownership unless you complete a declaration. By completing the form you confirm if you own the property in unequal shares and as such want to be taxed on your beneficial ownership share, not 50:50. You’ll note you have to have a Deed of Trust in place as well as completing this form.

When to fill in this form

  • You can use this form to declare a beneficial interest if you hold property jointly, and
  • you actually own the property in unequal shares, and
  • you are entitled to the income arising in proportion to those shares, and
  • you want to be taxed on that basis.

Prior to executing the form you are required to confirm;

We declare:
  • that we own this property beneficially in the proportions stated below; and
  • that we own any income arising from this property on the same basis.

Frequently Asked Questions

What stamp duty is payable when transferring beneficial interest to your spouse?
If by drafting the deed of trust and filing a declaration the transaction provides your spouse or civil partner an interest or a greater interest in land (for example your wife owns 50% and then is given the other 50% of the beneficial interest), stamp duty land tax (SDLT) or land transaction tax (LTT) will be payable based on any chargeable consideration given for the interest. Click to find out more about Stamp duty on transfer of property between spouses including how to pay no stamp duty.

What capital gains tax is payable?
You pay any capital gains tax on any profit from property that isn't your Principle Place of Residence in the shares stated in your deed of trust and notified to HMRC via Form 17. Click to find out more about Capital Gains Tax on Property for Married Couples.

Can I split rental income with my wife?
Yes you can, however the Form 17 process is only for married couples who are joint legal owners of a property. If you are the sole legal owner of a property and want to share rental income with your wife, but not add her to the legal title then this is the process:

  1. Draft a deed of trust - as you are the sole legal owner you also own 100% of the beneficial interest (unless stated otherwise in another deed).
  2. Do not file a Form 17 - (not required)
  3. Share the rental income or CGT - in the shares stated within the deed of trust and declare the same in your self assessment tax return at the end of the tax year,

Why do you need a Deed of Trust?
Form 17 is a declaration for tax purposes only to the HMRC; it doesn't cover all the legal aspects such as how to sell the property if either party wants to or who is liable for the mortgage repayments. A deed of trust is a legal document that protects the interest of joint owners who own a property as tenants in common.

We can draft you a Deed of Trust for £240 INC VAT - read more about a Deed of Trust

What do you do if you are joint tenants?
No. If you own the property as joint tenants then you have agreed that you own the property jointly 100%. This means that if either one of you were to die, then the other would still be the 100% owner of the property. This means that any income from a joint property held as joint tenants is owned 100% between you so you split it equally. Read more about buying as Joint Tenants.

How long after executing a deed of trust should you report the new beneficial split to HMRC?

(3)The declaration has effect only if notice of it is given to an officer of Revenue and Customs—

  1. in such form and manner as the Commissioners for Her Majesty's Revenue and Customs may prescribe, and
  2. within the period of 60 days beginning with the date of the declaration.

This means you have 60 days from the date of executing your deed of trust to inform HMRC about your beneficial shares with your wife/husband.

When can you start sharing the property income in the new shares?
Income Tax Act 2007 - Section 837 - Jointly held property: declarations of unequal beneficial interests states: (4)The declaration has effect in relation to income arising on or after the date of the declaration. As rental income is taxed on the date the rent is received then if it is your intention to share the income in a tax efficient way you should look to execute a deed of trust before the rent is received and file your Form 17 within 60 days.

For example: John and Mary jointly own a buy to let as joint tenants. The next rental payment is on the 31st March. On the 1st march they sever the joint tenancy, execute a deed of trust and file your declaration to reflect a new beneficial interest of 100% to Mary and 0% to John. When the next rental payment is received Mary will declare the income in her tax return for the year as 100% to her.

Can it be back dated?
No. The Income Tax Act states: (4)The declaration has effect in relation to income arising on or after the date of the declaration." This means that until you file a declaration of unequal beneficial split then HMRC will be taxing you based on an equal share of the property income.

How long is it valid for?

(5)The declaration continues to have effect until such time (if any) as there is a change in the beneficial interests of the individuals in either—

  1. the income to which the declaration relates, or
  2. the property from which that income arises.

If the beneficial interest for the property doesn't change then the declaration will remain enforce in the shares declared.

Can you change your shares after filing Form 17?
Yes you can. You simply need to update your deed of trust and file a new declaration. The process is formally called Revoking Deed of Trust however what your solicitor will do is review your existing deed to ensure that it can be revoked and that the parties agree to the same. The solicitor drafts a new deed of trust with the new income split and then you file a your form once executed. You can complete this process as often as you like however it is advisable to keep records of all property income received along with how it was shared with the evidence that HMRC were informed.

Can you use a Form 17 to declare a different income share compared to your beneficial share?
No. The income share must be split in the same percentages as those in the deed of trust and in the declaration. This form is used by HMRC to confirm where married or civil couples own a joint property together in unequal shares.

You'll note from the above that Form 17 states that the income earned from the property is declared in the same shares as the beneficial interest. You cannot benefit from income form a jointly owned property in a different share to your beneficial interest.

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