Rental income and the rules for married couples.

HMRC take what some may deem to be a somewhat ‘old-fashioned’ view as they apply certain rules to couples who are legally married or in a civil partnership where jointly owned property is concerned.

By default and in the vast majority of cases, married couples or civil partners jointly letting property are generally taxed on a 50/50 basis, regardless of actual ownership percentages. However, see below when an election can be made where couples actually physically own a property in unequal shares.

Income is split equally unless they own the property in unequal shares and elect in advance for tax to match those unequal shares using a form 17 and submitting it to HMRC, which we refer to as a form 17 election

In the first instance, therefore HMRC assumes a 50/50 split of income for jointly owned property regardless of who actually receives the rent into their bank. This may work out tax efficiently but can be punitive if one person is a higher rate taxpayer.

Please note that prior to last April 6 (2025) there previously existed special more flexible and beneficial rules for those renting out property under the furnished holiday lettings rules. On the 6th of April 2025 those rules were abolished and now follow the same 50/50 default rule as above as for standard let property.

A call to us as professionals can give you the advice you need to ensure the most tax efficient basis is applied. However, rules cannot be retrospective and it may be that the 50/50 rule applies to you in any case, or cannot be retrospectively applied.

Contact Andy on 07879 464577 or Lindsay on 07584 706664

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