Updated on 4 October 2024

Joint income from property

If you own rental property jointly with one or more people, make sure you understand how the income is split between you and the other owner(s) for tax purposes. The rules can vary depending on how the property is owned, and whether or not you and the co-owner are married or in a civil partnership.

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Owning a property jointly

Land and buildings (which we just call ‘property’ in this guidance) can be owned by more than one person. There are several ways of owning a property jointly, as follows:

Legal joint ownership – Joint tenants

All owners of the property are named on the legal title of the property and each person owns an equal share in the whole property.

Therefore, where a property is owned by two people as joint tenants, each person owns a half share in the whole property.

When one owner dies, the other will automatically become owner of the entire property. You can read more about joint property on death in our separate guidance.

Note that in Scotland ownership by joint tenants is called ‘joint ownership with survivorship destination’. The basic concepts are the same.

Legal joint ownership – tenants in common

All owners of the property are named on the legal title of the property, but each owns a separate share of the property.

Where a property is owned by joint owners as tenants in common, the separate ownership shares can be in any proportion that the joint owners agree (usually this would be agreed when the property is purchased, but can occur later on).  For instance, two people owning a property as tenants in common could decide that one person owns 80% and the other person owns 20%.

When one owner dies, they can leave their share to whomever they wish – the share will not automatically transfer to the surviving tenant in common. You can read more about joint property on death in our separate guidance.

Note that in Scotland, ownership by tenants in common is called ‘joint ownership with pro indiviso shares’. The basic concepts are the same. 

Beneficial joint ownership

If the property is in England, Wales or Northern Ireland, it is also possible for the property to be ‘owned’ (or partly owned) by someone who is not a legal owner of the property. By this we mean the person is not named on the title deeds of the property, but is still entitled to a share of the property under the law of trusts. This is called a ‘bare trust’ and the beneficiary is said to have ‘beneficial ownership’. 

For instance, a property could be legally owned by one person, but with a declaration in place to say that the legal owner holds a share of the property on bare trust for another person.

Note that the concept of beneficial ownership does not apply in the same way to property in Scotland, where the law is slightly different to that in England and Wales or Northern Ireland – if you are not a legal owner, then you cannot have a beneficial interest under Scottish law, but rather a 'right’ to the underlying property. We understand this ‘right’ largely results in the same outcome as beneficial interest. Sometimes a bare trust in Scotland might be called a ‘simple trust’.

  If you are not sure what type of joint ownership you have then you might need to check. You could ask the conveyancer who dealt with the original purchase for you. The Land Registry also has a blog with some tips to help you identify how your property is jointly owned.

Tax on income from jointly owned property

Bearing in mind the different ways that a property can be owned jointly, it is important to understand how that might then affect the split of any rental income for tax purposes.

  There are different rules that apply to income arising from property held in a partnership or income from a property that is let as a qualifying Furnished Holiday Let. We do not cover these rules in our guidance, but recommend you take professional advice.

Legal joint ownership - joint tenants

If you own a property as joint tenants, then you are usually taxed on equal shares of the rental income (in line with your equal ownership of the underlying property).

Example

Jeff, Mani and Ali are brothers. They own a property as joint tenants. For tax purposes, they each include a 1/3 share of the income and expenses on their tax return. 

Legal joint ownership - tenants in common

If you hold a property as tenants in common, then the way you are taxed on the rental income depends on whether you are married or in a civil partnership with the co-owner.

Tenants in common – married or in a civil partnership

If you hold a rental property as tenants in common with your spouse or civil partner then, by default, you are taxed on the rental income equally – 50% on your tax return, 50% on your spouse or civil partner’s tax return.

This is the case even if the agreed ownership split is unequal – for example if the property is owned 60:40 or some other proportion.

Form 17 election

However, you can make an election on form 17 to be taxed in line with your actual ownership share instead, if the ownership split is unequal. You can find form 17 on GOV.UK.

As regards the form 17 election, the following points are important:

  • You only need to make an election if the married/civil partnered co-owners are both named on the legal title. See later in this guidance for information where there is a single legal owner but joint beneficial owners.
  • The election must be made jointly by the married/civil partnered co-owners.
  • You need to make a separate election for each property (if you have more than one).
  • HMRC will require evidence that the unequal ownership is in the proportion you set out in the claim.
  • Once you have made the election, it is permanent – you cannot go back to being taxed 50:50 on that property – unless you later change your ownership shares to own the property equally.
  • The election only takes effect from the date it is signed and cannot be backdated.
  • The election must reach HMRC within 60 days of being signed and dated by both parties.
  • If the form does not reach HMRC within 60 days, then it is invalid and a fresh election will need to be made.

  In the above list, we talk about the need for evidence that the property is owned unequally. Often this will be some sort of written declaration stating how the ownership of the property is split between the owners. HMRC provide some further examples in their technical manuals on GOV.UK. This can be a complex area, so if you are unsure whether you have suitable evidence, you may need to take professional advice.

Example – form 17 election

Kay and Geoff are married and have owned a rental property as tenants in common for many years. Both Kay and Geoff have always been basic rate taxpayers. The property is owned 75% by Geoff and 25% by Kay, and this is set out in a declaration of beneficial interest – as prepared by their solicitor when they first purchased the property. They have not previously made a form 17 election and have therefore always been taxed on the rental profit 50:50.

In May 2024, Kay gets a new job and realises this will make her a higher rate taxpayer in 2024/25. They take advice and decide it would be better to pay tax based on their actual ownership proportions – which would reduce the amount of income taxable on Kay at the higher rate. They make a joint election on form 17 to be taxed based on their actual ownership shares, and this is signed and dated by each of them on 25 May 2024. HMRC receive the election in the post (along with a copy of the evidence of unequal ownership) on 10 June. They accept it as valid as they receive it within 60 days of the date the election was signed.

When Kay and Geoff calculate their rental income for 2024/25, they must allocate the profit up to 25 May 2024 (the date of the election) between them on a 50:50 basis for tax purposes. Thereafter, this source is taxed based on their actual ownership – 75% to Geoff, 25% to Kay. In all future tax years, the profits are allocated 75:25 for tax purposes.

Tenants in common – unmarried co-owners

If a property is owned as tenants in common by people who are not married or in a civil partnership the ‘default’ 50:50 split does not apply. Instead, the owners are usually taxed on their actual ownership share – there is no need to make a form 17 election in this case.

Example – unmarried owners of joint property

Mary and Terry are in a long-term relationship but are unmarried. They own a rental property, 80% by Mary, 20% by Terry. The profit from the rental property is taxed based on their actual ownership – so Mary reports 80% of the profits on her tax return, and Terry reports 20% on his tax return.

If Mary and Terry decided to marry, they would become taxable 50:50 on the property income from the date of their marriage – unless they immediately made a joint election on form 17.

In limited circumstances, it might be possible for unmarried joint owners to share rental income in a different proportion to the underlying ownership. However, this is a complex area and should not be considered without taking professional advice. You can read more about this in HMRC’s technical manuals on GOV.UK.

Beneficial joint ownership

If a property is legally owned by one person (or more than one), but is beneficially owned by others who are not named on the legal title, then usually any income should be taxed in line with each person’s beneficial ownership share.

It makes no difference if the beneficial joint owners are married or in a civil partnership. A form 17 is not required in this situation.

There is an exception, however, where the beneficial ownership of the property has been gifted by a parent to their child who is under the age of 18, and the income generated is more than £100 in a tax year. In this case the income will be taxable on the parent, regardless of the underlying beneficial ownership. You can read more about parental settlements in our guidance.

Example - beneficial ownership of a property

Mitch and Hattie are married. Mitch is the sole legal owner, but there is a declaration of beneficial interest stating that he holds 60% of the property for himself and 40% of the property on trust for Hattie. Hattie is therefore taxed on 40% of the income, and Mitch is taxed on 60%.

Note that in this example, Mitch and Hattie do not need to make a form 17 election. This election is only required where both spouses/civil partners are both legal owners of the property and have an underlying ownership share that is not 50:50. 

   The above arrangement – where Mitch holds part of the beneficial interest in the property for Hattie – is also known as a bare trust. You can read more about trusts in our separate guidance. This trust will be registerable under the trust registration service.

Transferring a share of property to your partner

You might decide to transfer a share (or an increased share) of a property to your partner, particularly if they pay tax at a lower rate than you.

This is a complex area with many things to consider, and it is recommended that you take advice (both tax and legal) before going ahead. For instance:

  • If you transfer a share of a property to your partner, this is a disposal for capital gains tax purposes. If you are not married or in a civil partnership when the property is transferred, there may be capital gains tax to pay on the transfer.
  • In some cases, there might also be stamp duty land tax (England and Northern Ireland), land transaction tax (Wales) or land and buildings transaction tax (Scotland) to consider.
  • You might also need to register the arrangement under the trust registration service.
  • If you transfer a share of a property to another person, they are then entitled to the relevant proceeds if the property is sold.
  • There could also be inheritance tax implications.

Reporting joint property income

You can read more about reporting joint property income – including information about Making Tax Digital for Income Tax (from April 2026) – in our page Reporting property income to HMRC.

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