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Introduction to this document

Deed of trust for property

If property is owned jointly, HMRC tax any rental income on each of the joint owners equally. However, a deed of trust can be used to transfer some or all of the beneficial entitlement from one joint owner to the other so that they are taxed on their share of any income or gains derived form the property. This can be espically useful where you and your spouse or civil partner are joint owners. 

Jointly owned property

There may be situations where it is preferable for you to own a property jointly with your spouse. For example, you’re both basic-rate taxpayers, but if you were the sole owner, the rental income would take you into the higher-rate band. By owning the property jointly, you can both have a share of the rental income and stay below the higher-rate band. HMRC will automatically treat you and your spouse as sharing the income 50:50 even if you don’t actually own the property in equal shares. This could be a problem where you want to allocate more of the rental profits to the lower earning spouse.

However, if you don’t own the property in equal proportions, you can jointly elect to be taxed on your actual shares. To do this you must both complete and sign HMRC’s Form 17 (Declaration of beneficial interests in joint property and income) and send it to HMRC. To support this declaration, you will also need to send evidence that the property is actually owned in unequal proportions by signing a Deed of Trust for Property.