Different ratio split on rental income for co-owned property

Hi, I co-own a property in the UK with my 2 sisters. Our 3 names are on the property deed. I would like to know: 1. Does HMRC accept different ratio split on rental income between the 3 co-owners? 2. Any formal document needs to be drafted or forms to be filled in for the different ratio split on rental income? Please advise, thanks. Regards, Karen

Hi ,
 

Thank you for your question.  Where there is no partnership, the share of any profit or loss arising from jointly owned property will normally be the same as the share owned  in the property being let. But joint owners can agree a different division of profits and losses and so occasionally the share of the profits or losses will be different from the share in the property. The share for tax purposes must be the same as the share actually agreed. Further guidance can be found at : PIM1030 - Introduction: jointly owned property & partnerships    . Thank you .

Hi, Thanks for your reply. I would like to ask more in the case of: “But joint owners can agree a different division of profits and losses and so occasionally the share of the profits or losses will be different from the share in the property. The share for tax purposes must be the same as the share actually agreed.” Does HMRC require me to engage a lawyer to prepare an official agreement for different division of profits from rental income? I read the link provided in your reply but it doesn’t specify. Thanks. Kind regards, Karen

I'm in the same position as Kymlam. It is still not quite clear: PIM1030 states "Where there is no partnership, the share of any profit or loss arising from jointly owned property will normally be the same as the share owned in the property being let. But joint owners can agree a different division of profits and losses and so occasionally the share of the profits or losses will be different from the share in the property. The share for tax purposes must be the same as the share actually agreed." Joint Owners can therefore agree a different division of profits. Is this the case from 6th April 2025 after the changes to FHL rules? Is there a formal agreement document as Kymlam has asked above? Thank you Macan

Hi ,
 

Thanks for your question. Although it is not necessary to approach a solicitor, it may be beneficial to seek legal advice to ensure all aspects are covered. Thank  you .

Hi ,
 

Thanks for your question. As TSEM9170 - Ownership and income tax: legal background: ownership income follows property - variation refers, in certain cases, ownership and income may vary from the actual ownership split. You are correct, owners may agree a different split of profits, however, we would expect expenses to match such split. Thank you .