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Where Taxpayers and Advisers Meet

Form 17 equivalent for non-spouses

KarenFa
Posts:11
Joined:Tue Jan 22, 2013 3:46 pm
Form 17 equivalent for non-spouses

Postby KarenFa » Sat Jun 05, 2021 11:05 pm

Hello,

I own a property with my daughter as tenants-in-common (me 90%, her 10%). We also do have a trust deed and I was about to send it with a Form 17 to the HMRC so that they understand the tax division. It turns out that Form 17 is for couples only (states that on the form). So my question is how do I go about sending HMRC evidence of unequal shares? Do I just do the self-assessment as per my share and hope it is not an issue?

Lambs
Posts:1555
Joined:Wed Aug 06, 2008 3:15 pm

Re: Form 17 equivalent for non-spouses

Postby Lambs » Sun Jun 06, 2021 7:09 am

K,

There is no form equivalent to a Form 17, for co-owners who are NOT spouses / civil partners.

You do not even HAVE to split the income according to your respective shares in the underlying beneficial ownership, which is one of the reasons why such a form is not required.

Regards,

Lambs

AGoodman
Posts:1223
Joined:Fri May 16, 2014 3:47 pm

Re: Form 17 equivalent for non-spouses

Postby AGoodman » Wed Jun 09, 2021 3:31 pm

Here's something i ought to know. How do you allocate income between co-owners other than as per beneficial ownership? Is there a provision/guidance or is it just something obvious?

(as it's the internet, I should point out this is a genuine question, not passive aggressive disagreeing!)

Lambs
Posts:1555
Joined:Wed Aug 06, 2008 3:15 pm

Re: Form 17 equivalent for non-spouses

Postby Lambs » Wed Jun 09, 2021 5:14 pm

A,

In the absence of a partnership proper, (whereby variable profit shares are very common), the co-owners can nevertheless rebut the presumption that income will be shared according to beneficial ownership.

This from PIM1030:

"Jointly owned property: no partnership
Where there is no partnership, the share of any profit or loss arising from jointly owned property will normally be the same as the share owned in the property being let. But joint owners can agree a different division of profits and losses and so occasionally the share of the profits or losses will be different from the share in the property. The share for tax purposes must be the same as the share actually agreed.

However, where the joint owners are husband and wife, or civil partners, profits and losses are treated as arising to them in equal shares unless:

both entitlement to the income and the property are in unequal shares, and

both spouses, or civil partners, must inform HMRC that their share of profits and losses is to match the share each holds in the property."

Of course such arrangements may amount to a settlement. But the settlement anti-avoidance provisions do NOT act to revert the income to the Settlor UNLESS the Settlor (or his or her spouse, etc.) still benefits from that diverted income - either presumed in law (broadly) as with settlements on spouses / civil partners / minor children, or as a matter of demonstrable fact otherwise.

So, the direct answer is: "however you darn well please".

Regards,

Lambs

AGoodman
Posts:1223
Joined:Fri May 16, 2014 3:47 pm

Re: Form 17 equivalent for non-spouses

Postby AGoodman » Fri Jun 11, 2021 12:25 pm

Thanks. You live and learn.

Lambs
Posts:1555
Joined:Wed Aug 06, 2008 3:15 pm

Re: Form 17 equivalent for non-spouses

Postby Lambs » Fri Jun 11, 2021 2:23 pm

These days, I worry more about forgetting.

Which, in itself, is probably a bad sign.

Best,

Lambs

maths
Posts:8234
Joined:Wed Aug 06, 2008 3:25 pm

Re: Form 17 equivalent for non-spouses

Postby maths » Wed Jun 16, 2021 5:45 pm

I think that there is confusion as to what is to be split ie is it profits and losses or income and expenses?

I believe that if X and Y (non-spouses) purchase a rental property they can, of course, allocate beneficial shares as they wish (which do not need to be in line with the % capital contributions to the purchase) and can also agree separate income and expense allocations.

Thus, for example, X and Y contribute 70 and 30 respectively to purchase a property worth 100.

X and Y can agree:
1. Beneficial shares are to be, say, 65% and 35% respectively.
2. X is to receive, say, 40% of gross rental income and Y 60%.
3. X is to bear, say, 30% of expenses and Y 70%.

So the income tax liabilities of X and Y are based on points 2 and 3 above.
Any CGT charges are based on point 1 above.


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