Property Ownership

The usual position is that the same person may be both the legal owner and the beneficial owner however the legal owner can be different from the beneficial owner –  a trustee is the legal owner while a beneficiary of the trust may be the beneficial owner.

There are two forms of joint ownership:

Tenants in common. Each person owns their own share of the property and are taxed on that share for both income tax and capital gains tax. On death that share is decided by their will or under the rules of intestacy.

Joint tenants. Each person has an interest in the property. On death the property passes directly to the remaining joint tenant(s).

Unmarried owners.

The general rule is that each owner’s share is in according to their ownership of the property. However, the owners don’t have to accept this. If income is shared between owners in a different split to ownership, other than for tax evasion purposes, the tax liability will be the same.

Married couples and civil partners - Joint ownership.

Legal ownership. This is effectively the paper title to the property and will be shown at the Land Registry. If the legal ownership of the property is in the name of both spouses, then for income tax purposes any rental income is automatically split 50:50 irrespective of the underlying beneficial ownership percentages. On sale any capital gain is split according to the beneficial ownership ratios.

Beneficial ownership. This is the right of use of the property (i.e. the right to live in it, or to let it out and receive the rental income). The beneficial ownership split can be shown at the Land Registry (but does not have to be). The taxation of rents will normally be 50:50 unless a ‘Declaration of beneficial interests in joint property income’ election, form 17, is filed with HMRC.

Form 17. This allows a married couple to say how the rental income is to be split but any split of such income must be follow the underlying beneficial ownership split. This must be lodged with HMRC within 60 days of its completion to be valid. It must be signed by both husband and wife. Evidence of the beneficial ownership split must also be supplied. Changes must be notified immediately to HMRC.

This declaration is irrelevant where the legal ownership is in the name of one spouse only or where the co-ownership of the property is by any two or more persons who are not married.


If a property rental business is operated through a genuine partnership, HMRC will tax each partner on the amount of income as shown in the partnership’s accounts. This means that the split of income can be changed each year if required.

Useful links.

Published 2 July 2018