Spouses – income from jointly held property
When it comes to property taxation in the UK, there are a number of factors to consider, especially when it comes to jointly owned properties. For married couples, civil partners, or those in a common law relationship, owning property jointly can offer a number of advantages, but it can also lead to some confusion when it comes to taxation.
One of the most important factors to consider is how income from jointly held property is taxed. This is an area where the rules have changed in recent years, so it’s important to stay up to date to ensure that you’re not caught out.
Prior to April 2016, income from jointly held property was taxed based on the actual share of income each owner received. This meant that if one spouse owned 70% of the property and the other owned 30%, each spouse would be taxed on the income they received based on their ownership share.
However, since April 2016, the rules have changed. Income from jointly held property is now taxed equally between the two owners, regardless of their ownership share. This means that if a married couple jointly owns a rental property and one spouse earns more than the other, they will still be taxed equally on the rental income.
It’s important to note that this change only applies to income from jointly held property, not to capital gains. Capital gains tax will still be calculated based on the ownership share of each individual.
There are some exceptions to this rule, such as when the joint ownership is not 50/50, or when the property is held as tenants in common rather than joint tenants. In these cases, the income will be taxed based on the actual share received.
If you’re unsure about how the changes to property taxation in the UK may affect you and your spouse, it’s important to seek professional advice. At SMH Group we have a team of experts who can help you navigate the complex world of property taxation and ensure that you’re fully compliant with all regulations. Contact the SMH Accounting & Business Advisory team on info@smh.group or 01142 664 432 to learn more about how we can help.
