Splitting Rental Income Between Spouses: How HMRC’s Form 17 Rules Work for Landlords (2025/26 Update)

Why Rental Income Splitting Matters for Landlords

For many married couples and civil partners, rental property is held jointly. By default, HMRC taxes rental income on a 50:50 basis, regardless of the actual ownership share. While this simplifies things, it can sometimes create unnecessary tax bills, especially if one spouse pays tax at a higher rate.

HMRC does allow couples to split income differently — but only if strict conditions are met. This involves using Form 17 and providing evidence of actual ownership shares.

This guide explains the rules, deadlines, and compliance pitfalls so landlords can structure rental income efficiently and avoid HMRC challenges.

The Default 50:50 Rule

• Married couples and civil partners are automatically taxed on an equal 50:50 split of rental income, regardless of beneficial ownership.

• This applies even if one party owns a larger financial share of the property.

• The rule helps HMRC simplify administration but may not always be tax-efficient.

When Form 17 Can Be Used

Couples can opt out of the default 50:50 rule if:

• The property is owned unequally in beneficial interest (e.g., 70:30).

• They want income taxed according to the actual ownership split.

• They submit Form 17 to HMRC within the deadline.

If ownership is equal, Form 17 cannot be used — the split must remain 50:50.

Evidence Required with Form 17

HMRC requires proof of beneficial ownership when Form 17 is filed. This may include:

• A Declaration of Trust.

• Updated title deeds.

• Other legally binding documentation showing the ownership split.

Without supporting evidence, HMRC will reject the claim.

Deadlines and Ongoing Rules

• Form 17 must be submitted within 60 days of both spouses signing it. HMRC does not grant extensions.

• The split applies from the date the form is signed, not retrospectively.

• Once in place, the new split continues until:

  
  

  • Ownership shares change, or

  • The couple separates or divorces.

  
  

• Couples cannot switch back and forth each year for tax planning — the split must reflect genuine ownership.

Common Pitfalls Landlords Must Avoid

• Filing Form 17 without legal ownership evidence.

• Missing the 60-day deadline.

• Trying to use Form 17 for unequal mortgage payments without changing beneficial ownership.

• Assuming the rule applies to unmarried couples — it does not.

How Wexley Helps Couples Structure Property Income

At Wexley & Associates, we help landlords:

• Assess whether income splitting reduces overall tax liability.

• Draft and formalise Declarations of Trust where needed.

• Handle Form 17 submissions accurately and on time.

• Stay compliant with HMRC, avoiding rejected elections and disputes.

By structuring rental income correctly, couples can reduce tax bills while staying firmly within HMRC rules.

Structure Your Property Income the Right Way

Splitting rental income between spouses can be a powerful tax planning tool — but only if done properly. Errors or missed deadlines can undo the benefits and trigger HMRC enquiries.

Contact Wexley & Associates today to make sure your property ownership structure works for you, not against you.

References

• HMRC Form 17: Declare beneficial interests in joint property and income

• HMRC Trusts, Settlements and Estates Manual (TSEM): Property income splits for spouses and civil partners

• Related Wex Insider article: CGT on Selling a Buy-to-Let: 60-Day Reporting Explained