7 September 2026
This is a question our team is asked very regularly.
If a property is owned as joint tenants, each spouse is treated for tax purposes as owning 50% of the capital and is taxed on 50% of the income.
So, if you want the rental income to be shared in a different proportion, you must also change the beneficial ownership of the capital.
In practice, this usually means:
- A solicitor prepares a deed or declaration of trust setting out the new ownership shares (e.g. 70:30).
- Both spouses sign and send HMRC Form 17 within 60 days of the later signature, to notify them of the new beneficial split.
- The Form 17 election takes effect from the date of the signed deed; it cannot be applied retrospectively.
Transfers of assets between spouses are generally “ignored” for Capital Gains Tax (CGT) and Inheritance Tax (IHT) purposes, so there is usually no immediate CGT or IHT charge.
However, there can be Stamp Duty Land Tax (SDLT) implications if the property has a mortgage and one spouse takes on part of the debt. Advice from both a solicitor and a tax adviser is therefore important.
It is also important to tell the mortgage lender about any change in ownership, to avoid any potential breach or default under the mortgage terms.
Finally, if the property was the main residence of one spouse but not the other (for example, before a further marriage or relationship), part of the capital gains tax private residence relief may be lost on a future sale, which can increase the CGT due.
As ever, the facts of each case matter and good advice is critical. We’re here to help
