Splitting Rental Income with Your Spouse: A Guide for Landlords

Splitting rental income between spouses or civil partners can be a smart move - not just for fairness, but also for tax efficiency. With the right setup, you could reduce your overall tax bill and make better use of both partners’ personal allowances.

But while the idea sounds simple, HMRC has specific rules around how rental income should be shared, and it’s important to get it right. At SBX Accountants, we regularly advise landlords on how to structure their property income in the most tax-efficient and compliant way.



Here’s everything you need to know.

Why Split Rental Income?

The main reason is tax savings. If one spouse is a higher-rate taxpayer and the other is in a lower tax band (or pays no tax at all), shifting more of the rental income to the lower earner can reduce your combined tax liability.

For example:

• If your spouse is earning below the personal allowance (£12,570), they may be able to receive rental income tax-free.
• Even if they're earning more than this, they might still fall into the basic rate band - and pay 20% tax instead of 40%.

Beyond tax, income splitting also makes sense for budgeting and fairly reflecting each partner’s involvement or financial contribution.

Is It Legal?

Yes - HMRC allows rental income to be split between spouses or civil partners as long as it reflects the underlying ownership of the property or is supported by the correct documentation (e.g. a Form 17 and Declaration of Trust).

But it's crucial to follow the formal process - particularly when aiming for a split that isn’t 50/50.

Does the Property Need to Be Jointly Owned?

Not necessarily.

• Sole ownership: If only one partner is the legal owner, the rental income belongs to them for tax purposes. To share income, you'd need to transfer legal or beneficial ownership.
• Joint ownership: If the property is jointly owned, how the income is taxed depends on the ownership structure.

You can either:

1. Make your spouse a legal co-owner (which may involve stamp duty or capital gains tax).
2. Use a Declaration of Trust to give them a beneficial share of the property (without changing the legal title).

Joint Tenants vs Tenants in Common

There are two main ways for couples to jointly own property:



1. Joint Tenants (default for married couples)

• HMRC assumes a 50/50 income split.
• You can’t change this without first switching to tenants in common and submitting Form 17.
• Both parties have equal ownership and automatic survivorship rights.

2. Tenants in Common

• Allows you to split ownership (and income) in any proportion (e.g. 80/20, 60/40).
• Must be backed by a Declaration of Trust.
• If you want HMRC to tax rental income in line with this split, you must submit Form 17 within 60 days of signing the Declaration.

Important: You can only use Form 17 if both partners are legal owners of the property.

Step-by-Step: How to Split Rental Income Between Spouses

1. Check the current ownership structure

• If you’re joint tenants, you’ll be taxed 50/50 by default.
• To use unequal shares, switch to tenants in common.

1. Create a Declaration of Trust

• This confirms how the beneficial interest (and rental income) will be split.

1. Submit Form 17 to HMRC

• Only valid if both spouses are legal owners.
• Must be submitted within 60 days of signing the Declaration.

1. Keep proper documentation

• Retain records of ownership, income splits, and any legal agreements.
• Keep track of rental statements, mortgage payments, and tax filings.

What If You’re Not Married or in a Civil Partnership?

Unmarried couples, friends, and business partners can also co-own property and split income - but HMRC doesn’t assume a 50/50 default. Instead, income should be split based on actual ownership shares unless agreed otherwise in writing.

Form 17 does not apply here, but you should still have:

• A Declaration of Trust
• Clear records of each person’s contribution and ownership

Considerations Before Restructuring

Before making any changes, speak to an accountant about:

• Stamp Duty Land Tax (SDLT) if transferring ownership with a mortgage.
• Capital Gains Tax implications.
• Loss of mortgage interest relief if the property is transferred into joint names.
• Inheritance planning — especially where survivorship rules differ between ownership types.

How SBX Accountants Can Help

We help landlords across the UK navigate through the complexities of rental income, ownership structures, and HMRC compliance. Whether you have one buy-to-let or a growing portfolio, we’ll help you:

• Split rental income legally and tax-efficiently
• Prepare and submit Form 17 and Declaration of Trust
• Plan for future growth, CGT, and inheritance tax
• Keep accurate, cloud-based rental accounts if required (we use QuickBooks)

We also provide full landlord tax returns, property portfolio reviews, and strategic tax planning.

If instead you have rental properties in a limited company, we have special accounts packages for property investors.

Get Expert Help Today

If you’re looking to split rental income with your spouse or civil partner and want to make sure you’re doing it the right way, SBX Accountants can guide you through it.

Let’s help you save tax, stay compliant, and grow your property income with confidence.

📞 Book a free callback or request a quote on sbxaccountants.com