An area that HMRC seem to be paying close attention to at the moment is how rental income is divided between spouses. The rules apply that if income is received from a jointly owned property, then the income should be split 50/50 under s836 ITA 2007. It is however possible to alter this under s837 if:
- a joint election is made (on Form 17); and
- spouses are beneficially entitled to unequal shares of the income.
Form 17 requires proof of point 2. You are able to own property in two ways; joint tenants where the split is 50/50, or tenants in common where the ownership can be unequal, and allows for specific distribution of the owned share of the property through an individuals will - paperwork from the land registry needs to be completed in order to change the tenancy type.
HMRC states that where the joint owners are husband and wife, or civil partners profits and losses should be shared equally, unless:
- both entitlement to the income and the property are in unequal shares, and
- both spouses, or civil partners, ask their respective tax offices for their share of profits and losses to match the share each holds in the property.