Does a Form 17 election have to agree with ownership shares

by **mobileaccountant** on Fri May 15, 2009 5:29 pm

My question is in two parts.

1. Husband and Wife own several buy to let properties 50/50, Husband pays 40% wife pays 20% Tax, So Can a Form 17 election be made for a greater proportion to wife thus saving higher rate of tax, even though ownership of properties is 50/50.

2. Second part ... and I think I already know the answer.. but can this election be backdated ?

by **Peter D** on Fri May 15, 2009 5:36 pm

You need to speak with a well versed solicitor regarding a 'Declaration of Trust' to define the 'Beneficial Ownership' of the properties and thus the use of Form 17 to reflect this change. This does not change the legal ownership so it is quite clean and the solicitor will inform the LR of the restriction via form RX1 ( SEV ) Beneficial Ownership can be 1 to 99 to 99 to 1. Regards Peter

by **mobileaccountant** on Fri May 15, 2009 5:51 pm

Thanks Peter, not sure of your abreviations.. what is LR and what is SEV ?

Also re second part of question can this election be backdated or does it only take effect for future tax years.. ?

by **zofo** on Sat May 16, 2009 9:38 pm

Hi,
In brief, the 50:50 rule applys to jointly held property (for this purpose property means shares, bank/building society accounts as well as actual land and buildings etc) by husband and wife/civil partner,unless the actual real ownership of the property and the income from it are held in a different split other than 50:50. If so then both partners can make a declaration/election on form 17 for each to be taxed on their actual share. It should be noted that couples do not have an option to have jointly held property and the income from it, taxed any way they like.

As for the second part of your question, you can not back date the election. The election will take effect to income from the date both parties sign the form 17 PROVIDED..the form 17 reaches the Inspector within 60 days of the date it was signed.

It should also be noted that you will not be able to make an election on form 17 for joint bank/building society accounts held in the UK as each spouse is considered to own the whole account. If you wanted to mkae an election for such accounts then you would need to change ownership leaglly by way of a deed or some other legal instrument whic HMRC would need to see.

These are the basics and a lot more detail can be found in the Independant Taxation Manual IN115 et seq which can be found on the HMRC website. Just type IN115 in the search box.

:-)

by **Peter D** on Sun May 17, 2009 9:17 am

Land Registry ( LR) 'SEV' form RX1 from the LR, this declares the restriction to the LR. The legal ownership of a property and the Beneficial Ownership can differ, and although the legal ownership could be joint so 50/50 but th beneficial ownership can be arranged differently via a Declaration of Trust that defines the Beneficial Ownership apportionment. Regards Peter