Property Income-What is a Form 17 declaration?
The usual tax position for couples living with their spouse or civil partners is that property income held in joint names is divided 50:50, regardless of the actual ownership structure. However, where there is unequal ownership and the couple wants the income taxed on that basis, a notification must be sent to HMRC together with proof that the beneficial interests in the property are unequal. This is done using a Form 17 Declaration.
Who can make a Form 17 declaration?
A Form 17 declaration can only be made by spouses or civil partners living together and owning property in unequal shares, with income being allocated proportionally to those shares. Couples separated or in some other type of union cannot make a Form 17 declaration. The declaration is only valid if both partners agree. If one spouse/partner disagrees then the income will continue to be treated on a 50:50 basis even if the ownership structure is different.
A Form 17 declaration stays in place until the couple's status changes (e.g., separation or divorce) or the ownership structure changes. If either of these occurs, the 50:50 income split will reapply.
When can 17 declarations not be used?
There are a number of scenarios where a form 17 cannot be used, including when spouses or civil partners own property as beneficial joint tenants, when the income is from commercial letting of furnished holiday accommodation, and for partnership income.
Under certain circumstances, making a Form 17 declaration can be beneficial where property is held in an unequal split. If you would like to consider your options, please call for more information and guidance.
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If you have a property owned unevenly with your spouse and are unsure if making a Form 17 declaration will benefit you, contact our specialist tax team today. Our team can advise you on if this declaration will help your specific situation. For more information, contact us today.