Tenants in common: change of percentage and form 17

My wife and I own a property as ***tenants in common***, where my wife has a 99% share and I have a 1% share. This (both the fact that we are tenants in common and the percentages) was written in the documentation by the solicitor when we purchased the property. Is it ***compulsory to submit a form 17***, or can we can just report the income (an maintenance and finance expenses like mortgage interests) as 99% to my wife and 1% to myself when we submit our tax returns, ***without submitting form 17***? If we change the percentages as beneficiaries of the tenancy in common, let say from 99% and 1% to 30% and 70%, do we need to submit form 17 *and/or* a deed of trust? If a deed of trust is needed, does it need to be produced by a solicitor ***and/or*** sent to HMRC ***and/or*** to HM Land Registry? Or can it be a private document with no need of a solicitor or notification to HMRC and/or HM Land Registry? Thank in advance for any reply.

Hi Francesco Cosentino,
 If both the entitlement to the income and the property are in unequal shares, a form 17 election can be made to allow profits or losses to be split according to their actual share of ownership.
You’ll also need to provide evidence that your beneficial interests in the property are unequal, for example a declaration or deed.
Further information is available here:
Declare beneficial interests in joint property and income.
You will need to send the form 17 and evidence to HMRC to note.
You will be required to submit a further declaration with evidence should you decide to change your beneficial interests.
Thank you. 
 

Thanks a lot for the quick reply. If possible, I would appreciate some clarification. The property was purchased as tenants in common and the shares (99% to my wife and 1% to myself ) haven’t changed since then. From the moment the property was purchased 7 years ago, we have always reported the income in our tax returns as 99% to my wife and 1% to myself. No form 17 has ever been submitted as we were advised by our solicitor and our accountant that form 17 is only needed if you change the shares. The solicitor and the accountant advised that it was correct reporting 99% of the income in my wife’s tax return and 1% income in my tax return, and explained that form 17 was not needed as the shares were indicated in the sale documents by the solicitor when we purchased the property, and the shares never changed. I hope I have clearly explained what the situation is, sorry if I’ve been bit wordy. So, just to be completely clear, was a form 17 ***compulsory*** in order to correctly report the income as 99% to my wife and 1% to myself? Thanks a lot, Francesco

Hi Francesco Cosentino,
Your tenants in common split of 99% to your wife and 1% to yourself is only known to the Land Registry at this time.
No action needs to be taken in regard to this split with confirmation letters eg Form 17 and others as whatever income from property or capital gain may arise latterly, they will be the agreed split. 
Thank you 

Thanks for confirming that there was no need to submit Form 17 and that we have correctly reported the income split as 99% and 1%. Best regards, Francesco Cosentino

Hi, My wife and I already hold our property under a tenants in common arrangement (with an unequal percentage). However, we would now like to change the percentage of that tenants in common ownership. Could you please advice as to what the requirements are for this? I can find articles about changing between tenants in common and joint tenancy, but nothing about simply changing the percentage of the tenants in common ownership Kind regards, Matt

Hi,

To change the percentage of unequal beneficial interests in the property of the tenants in common ownerships you would need to submit a new Form 17 Declare beneficial interests in joint property and income and provide supporting evidence.  

Declare beneficial interests in joint property and income

For more information please refer to the Trusts, Settlements and Estates manual TSEM9800 onwards:

TSEM9800 - Property held jointly by married couples or civil partners

Thank you.

I have a couple of questions, if someone could clarify please? 1. To use form 17 for allocating unequal shares for a jointly owned property (Husband and Wife) should the title deed be registered as TENANTS IN COMMON rather than JOINT TENANTS with land registry. I am referring to the below articles which I found on the net. Most married couples or civil partners own property as joint tenants. If this is the case you will need to sever your joint tenancy and register as tenants in common instead. Joint tenants can only split their beneficial interest equally (50/50) https://www.parachutelaw.co.uk/news/property/hmrc-form-17 Husband and wife (or civil partners) should check that they jointly own the property as ‘tenants in common’. A form 17 election cannot be made (i.e. the property income cannot be split other than in equal shares) if the couple own the property as ‘joint tenants’. https://www.taxinsider.co.uk/joint-property-and-form-17-practical-points#:~:text=Husband%20and%20wife%20(or%20civil,property%20as%20'joint%20tenants'. A form 17 election cannot be made (i.e. the property income cannot be split other than in equal shares) if the couple own the property as ‘joint tenants’. https://peterjarman.com/community/exploring-joint-ownership-joint-tenant-vs-tenants-in-common/ 2. If the property is solely owned by the spouse, do we need to register the trust to allocate rental income to the other half or just a deed of trust be enough? Please advise on the correct way of doing this. Thank you in advance.

Hi,
For your first question we refer you to TSEM9851 which states the following- ‘Where married couples or civil partners elect not to be taxed 50/50, the normal rules of beneficial ownership apply.
The starting point is that the jointly held property is presumed to be held as joint tenants (TSEM9230).
As TSEM9230 says, there are various ways this presumption can be displaced by evidence to the contrary - for example, a valid declaration of trust in equal or unequal shares. However, if the shares are equal there would be no possibility of a joint declaration on form 17 for tax purposes, so only a declaration in respect of unequal shares would be correct.’
In regards to your second question- most types of trusts giving an interest in property to somebody who is not the legal owner now need to be registered with HMRC via the Trust Registration Service.
You can find guidance on the registration requirements and how to register here:
Register a trust as a trustee.
There’s also more information about what type of trusts need to be registered at:
TRSM23050.
Thank you.

Thank you. Am I correct in assuming that the property can be owned as joint tenants; a declaration of trust and form 17 can be then used for unequal beneficial interest?

Hi,

The declaration of trust and form 17 apply for persons who are married or are civil partners, and wish to hold unequal shares in an asset like a property and its income.

Thank you.

The question here really is can the couple hold the property as joint tenants or it has to be tenants in common?

Hi, I'm not a HMRC Admin and I can't read your most recent post yet but form 17/unequal sharing of interest in property can only ever apply if it is held as tenants in common. The law presumes property is held equally (50% each) by spouses where it is jointly held (as joint tenants or tenants in common). However the law allows spouses to be taxed on their actual share rather than the presumed 50% each basis. This is why it only applies to tenants in common, because if it was owned as joint tenants their actual share would be the same as the presumed share (50% each) so they can only be taxed on that basis. It is only where it is held as tenants in common can it differ from the presumed 50% each.

Hi JoLeon,
Thank you for your question, Husband and wife (or civil partners) should check that they jointly own the property as ‘tenants in common’. A form 17 election cannot be made (i.e. the property income cannot be split other than in equal shares) if the couple own the property as ‘joint tenants’.
Thank you.

HMRC Admin: Hi, grateful if you could advise on how to fill in a tax return for the rental income under the following situation: ***The property is owned by two persons who are not couples or civil partners, and they own different shares of the property (Tenants in Common)*** **How should I fill in the section *Details for UK Property *? Do I need to fill in the Form 17 together with legal document as a proof?** Or **Simply fill in the acutal rental income I receive? *Could I claim the **full amount of £1,000 property income allowance**? Thanks.

Hi Pet,
Where two or more individuals jointly own property any profit or loss is normally divided between them according to their share of the property.
Joint owners can agree a different division of profits and losses, so sometimes the share of the profits or losses will be different from their share in the property. The share for tax purposes must be the same as the share actually agreed.
The form 17 is not applicable in your case. You would simply fill in details of the rental income you receive.
If you own a property jointly with others, you are each eligible for the £1000 allowance against your share.
Thank you.

Hi, I own a BTL property as joint tenants with my wife 50/50%. We plan to share the income 50/50 on our SA Tax Assessment. If on a particular year my wife or I earn more or less than the other person, can we allocate the rent as 30/70% for example? If this scenario happens towards the end of the tax year do we need to fill in a form 17? Or can we just show on bank statements that we split it and took 30/70%? Kind Regards

Hi,

Yes, you can allocate the rent split in unequal shares but you would have to complete and send a Form 17 with a deed of trust. You cannot just show bank statements.  

The unequal split starts from the date that the form is signed regardless of what point in the tax year it is signed. The form also has to be received by HMRC within 60 days from the date that was signed. You can see more information here:

Declare beneficial interests in joint property and income

Thank you.
 

Hello, My husband and I own a rental property as tenants in common (50/50 shares). We would like to change the ownership to 90/10 in my favour. Is there a standard template for a deed of trust when changing ownership percentages in a property? What information exactly is needed for the deed of trust to be valid for HMRC purposes? Can the deed of trust be backdated?

Hi Thorn,
Thank you for your question.
Please refer to our guidance:
TSEM9330 - Ownership and income tax: introduction: income tax principles - joint ownership and
TSEM9800 - Property held jointly by married couples or civil partners: contents.
As a married couple who jointly own a property you will need to make a declaration of your unequal shares by completing a Form 17 and sending this to us with evidence such as a valid declaration of trust see:
 TSEM9852 - Form 17 rule - how couple make declaration.
A valid declaration will only apply from the date the Form 17 has been signed and cannot be backdated. 
Thank you.