HMRC has recently updated its guidance on legal title and beneficial ownership of jointly held property. We have summarised the position below:
Unmarried couples and unconnected individuals are not required to make an election for tax purposes in respect of their interests in joint property: they simply declare their respective share of joint income on their own tax returns.
- Evidence must be provided where beneficial ownership is different to legal title.
- See Joint property: legal v beneficial ownership
Married couples and civil partners can elect to be taxed on their actual entitlement to income from jointly held property.
- A joint declaration of unequal beneficial interests must be submitted to HMRC.
- Alternatively, a simple transfer of legal title to your spouse will secure 50:50 treatment and no election is required.
- See Joint property elections
Form 17 (for married couples and civil partners)
- Form '17 - Declaration of beneficial interests in joint property and income' has also been updated by HMRC.
- The guidance and form both state that evidence of beneficial interest must be submitted along with any form 17 declaration.
All change: bank accounts and investments
The guidance notes to the previous version of Form 17 said: "You cannot make a declaration about investments in which you and your husband or wife or civil partner invest as joint beneficial owners. In these types of accounts each owner is equally entitled to the whole account and any income frm it is paid to both parties jointly. All bank/building society accounts are held in this way."
There is no mention of investments in the 2011 version. It is considered that HMRC's treatment afforded on the old form was incorrect.
