Form 17 Income Tax declaration of beneficial interest in joint property and income

The Form 17 Income Tax Declaration Form is used by married and civil partnership couples who want to declare unequal shares in a jointly owned property held as tenants in common. 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—
(a)who are married to, or are civil partners of, each other, and
(b)who live together.
(2)The individuals are treated for income tax purposes as beneficially entitled to the income in equal shares.

Without a Form 17, 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 Form 17 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

HMRC state,"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".

When should you complete a Form 17?

You should fill in a Form 17 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 Form 17 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 Form 17. 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 (Form 17) 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"

Do you need a deed of trust for a Form 17?

We can help support you with:
  • Drafting a deed of trust for Form 17
  • Changing title ownership from joint tenants to tenants in common
  • Registering the deed of trust at the Land Registry
We cannot give tax advice however our solicitor can help draft your deed of trust

Fixed Fee, No Sale No Fee with a 5 out of 5 rating


When should you not complete a Form 17?

You should not fill in a Form 17 when:

  • 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).

  • Can you use a Form 17 to declare a different income share compared to your beneficial share?

    No, and you must be very careful if you are given advice by an accountant or another professional to do so.

    Form 17 is used by HMRC to confirm where married or civil couples own a joint property together in unequal shares.

    HMRC would normally tax you equally on the jointly owned property income regardless of your actual beneficial ownership unless you complete a Form 17. 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.

    Form 17 states:
    If you live together with your spouse or civil partner, we normally treat income from property held in your joint names as if it belonged to you in equal shares and tax each of you on half of the income, regardless of actual ownership. Please complete this form if you want to be taxed on your actual shares (known as `actual basis'). You will also need to provide evidence that your beneficial interests in the property are unequal, for example a declaration or deed.

    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.

    Remember to provide evidence with this form that your beneficial interests in the property are unequal, for example a declaration or deed. Remember also that you cannot use this form if in fact you are entitled to the income in different proportions to your beneficial interest in the property.

    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.

    For example:
    Jane and David are married and jointly own a property which they own as tenants in common. Jane owns 80% of the property and David owns 20%. They will need to have a deed of trust to confirm their legal rights to the property and complete a form 17 to declare their income in the property in their unequal share of 80% / 20%. Jane wouldn't be able to have a beneficial interest of 80% and then benefit from the income therein at a different rate.

    FAQS about Form 17

    Why would you want to share the property in unequal shares?

    In the example above, it could be more tax beneficial for Jane to give David more of her property income, especially if David hasn't used all of his personal allowance for the current financial year. What Jane can't do is use a Form 17 to declare a differing share of the income on her tax return compared to her beneficial interest.

    Why do you need a Deed of Trust as well as a Form 17?

    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 Deed of Trusts)

    Can you use a Form 17 when you own the property as 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.

    What should I do if I have received joint property income in different shares compared to my beneficial interest?

    You should speak to your accountant immediately and provide a link to this article. Your accountant should look to notify HMRC of the issue and make an adjustment in the current year's tax return for you.

    Related News Articles

    Basic Deed of Trust
    Beneficial Ownership vs Legal Ownership
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