HMRC Form 17 Income Tax Declaration
- The HMRC Form 17 is a tax form for married couples who want to share property income in unequal shares.
- The form is completed online and then posted to HMRC.
- You need to include a declaration of trust confirming your unequal share in the property; normally, a Deed of Trust or a deed of assignment.
- Tax is paid in the new shares for the next rental payment received once HMRC confirms receipt of Form 17.
- You can only share rental income in unequal shares if you are tenants in common.
- You have 60 days to file your Form 17 after you execute your declaration of trust.
- You can download the form from the Government website.
Form 17 HMRC: The basics
Form 17 declarations are exclusively for married couples and civil partners. This means other individuals, including separated married couples, cannot use this form. Separated couples are taxed based on their actual entitlement to the income.
The form is specific to married couples who jointly own a buy-to-let property and want to share the rental income and sale proceeds in unequal shares, often because one pays less tax. This is because HMRC assumes the income is shared 50:50 unless you declare differently.
You can share the rental income in any way you like: 90:10, 99:1, or even 100:0. You can also change the shares in the future with a new deed and a Form 17.
However, even a small change to the beneficial ownership means that the Form 17 declaration is no longer valid, and the standard 50:50 tax rule applies again. The couple must make a new declaration to change the ownership split for tax purposes.
Share rental income today using a deed of assignment. Drafted by an experienced solicitor. The first draft is within 1 to 2 working days - often within hours of instruction.
We draft a lot of deeds for numerous purposes, whether you're transferring a buy-to-let property into your partner's name or protecting your interest in a property that you live in.
The deed assigns:
- Rental income on buy-to-let properties.
- Capital gains.
- Full or partial ownership of a property.
HMRC assume you own an equal share
Under Income Tax Act 2007 Section 836, married couples and civil partners living together are generally treated as owning jointly held property income equally. However, this doesn't apply in these situations:
- Income from furnished holiday lettings.
- Income from a formal partnership (in which case, the partnership agreement determines the income split).
- When both partners have signed a declaration stating their actual ownership shares in the property and its income.
Without a declaration of trust and a Form 17, HMRC assumes that any income generated from the jointly owned property, such as rent or capital gains, is shared equally (50/50).
In cases where you own an unequal share of the beneficial interest in the property, you must complete a declaration and have a signed and witnessed declaration of trust such as a deed of assignment or a Deed of Trust.
If you currently hold the property as Joint Tenants, you can draft a Deed of Assignment for your shares, sever your joint tenancy and send the severance application to the Land Registry. Once this is completed, you can apply for the Form 17.
Protect your interest in a property and confirm how to sell. Drafted by a solicitor. The first draft is within 1 to 2 working days - often within hours of instruction.
The deed includes:
- Deposit paid.
- The percentage ownership of each party.
- How to share expenses like the mortgage and bills.
- Share of property income - rent or gain on sale.
- How to sell the property.
- How the property is divided in the event of separation, divorce, or death.
How do you fill in Form 17?
- Both your full legal names and your spouse's/civil partner's full legal names.
- National Insurance numbers.
- Tax references (if you have one).
- Both of your dates of birth.
- The current residential address of you and your spouse or civil partner - if UK or not.
- The complete address of the property held in joint names.
- Specify whether it's a house, a flat, etc.
- The date you acquired the property.
- If there's a mortgage on the property, provide details such as the lender's name and the outstanding balance.
Remember to provide evidence with this form that your beneficial interests in the property are unequal, for example, a declaration or deed.
You cannot use this form if you are entitled to the income in different proportions to your beneficial interest in the property.
- Beneficial interest in this property - Your share (%).
- Beneficial interest in this property - Spouse’s or civil partner’s share (%).
- The date when you are completing and submitting the form.
- Both you and your spouse/civil partner must sign the form to confirm its accuracy.
Clearly state the percentage of the property each of you owns. This should reflect your actual beneficial interests, not necessarily the legal ownership.
If the beneficial interests are not equal, explain the reason for this difference. This could be due to contributions towards the purchase price, inheritance, or other factors.
You can't share capital gains in different shares to the rental income.
You may want to share rental income in one share and then any profit for CGT in another way.
However, HMRC states, "A couple cannot make a declaration where the split of beneficial ownership of the asset and of the income from it differ. Nor do they have to declare even if they are entitled to. So you should not take the absence of a declaration as evidence that the beneficial ownership is split evenly".
This means that:
- Couples aren't required to use Form 17 to declare their income split unless their ownership shares are unequal.
- The absence of a Form 17 declaration doesn't automatically mean the income is split 50/50. It simply means they haven't filed the specific form.
- If a couple's ownership shares are different, they must use Form 17 to declare how they split the income to match their ownership.
When should you complete HMRC Form 17?
You can download the form from the Government website.
- You can use this form to declare a beneficial interest if you hold property jointly, and
- You own the property in unequal shares, and
- You are entitled to the income arising in proportion to those shares, and
- You want to be taxed on that basis.
- you are not beneficially entitled to the property income
- it is partnership income
- it is income from the commercial letting of furnished holiday accommodation
- it is income from shares in a close company
- it is income which for tax purposes is treated as income of a third party, even if the income arises from property held in your joint names
- it is property held in your joint names
- property held as beneficial joint tenants where you are both jointly entitled to the whole of the property and income
- property that is not held in unequal shares (you cannot choose to have the income taxed on an unequal basis because you think it would be to your advantage).
- Get up-to-date property tax advice on SDLT, CGT, IHT, personal vs partnership vs company structure.
- Free 15-minute initial consultation with a qualified accountant from our panel of tax advisors.
- Ask your tax questions and get guidance on what you can do next.
- If further accountancy work is required, you'll be quoted for this as a separate piece of work with no obligation to purchase.
What happens if you haven't filed a Form 17 with HMRC?
Submitting a form is essential to apply for an unequal split of profits from property, as the case of Mr Deepak Koshal Mrs Minu Koshal v HMRC [2013] UKFTT 410 (TC) confirmed.
This example highlights how HMRC handles cases where spouses or civil partners look to share property income in unequal shares and don't declare the share in writing in a Deed of Trust or by filing a declaration.
The ruling stated: "The review concluded that income from property held jointly by married couples and civil partners are treated as beneficially owned by the individuals in equal shares under ITA 2007 s.836. Consequently, the Appellants are taxable on income on a 50:50 basis. This rule applies even if the individuals own the property in unequal shares. It was pointed out that there were no signed declarations stating beneficial interest was held in any other way"
The case further confirms that the obligation to provide the correct information to the HMRC falls upon the taxpayer under the self-assessment tax system: "It must be remembered that it is the obligation of the taxpayer to make full disclosure under the self-assessment system."
Where do you send Form 17 to?
You should send the completed HMRC Form 17 (within 60 days of the date of the deed) to the following address:
Pay As You Earn and Self Assessment, HM Revenue and Customs
BX9 1AS, United Kingdom
Important Note: Always double-check the official HMRC guidance for the most up-to-date mailing address, as it may be subject to change. You can usually find the most current information on the official HMRC website.
Do you need a declaration of trust Form 17?
If you're looking to update your beneficial interest at the Land Registry, this form is how to do it and we can help you draft it.
Fixed fee of £240 INC VAT
Caragh is an excellent writer and copy editor of books, news articles and editorials. She has written extensively for SAM for a variety of conveyancing, survey, property law and mortgage-related articles.
