PIM1035 - Introduction: Jointly owned property and partnerships
Source: gov.uk (2025-06-09)


Jointly owned property - overview

Where property is owned jointly by one or more people and rental income is received jointly (see PIM1030 (https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim1030)) the way the income is taxed depends on whether the letting is carried on in partnership. Joint letting does not, of itself, make the activity a partnership.

Usually, there will not be a partnership and the individual’s share from the jointly owned property will be included as part of their personal property business profits.

Less commonly, the joint letting may amount to a partnership. If this is the case the share of the profit or loss must be kept separate from any other letting income. A partnership loss cannot be deducted from a personal property profit and vice versa.

The property income rules will not alter an individual’s status. An individual who is not a member of a partnership will not become a member of a partnership just because they start to receive property income jointly with another person. See below for more guidance where a partnership exists. NB The Partnership Manual explains what a partnership is at page PM120100 (https://www.gov.uk/hmrc-internal-manuals/partnership-manual/pm120100) and when a partnership exists at page PM130000 (https://www.gov.uk/hmrc-internal-manuals/partnership-manual/pm133000).

Individuals who have jointly owned property should know who is keeping the records and have access to them. They are personally responsible for including their share of the income in their own tax return even if they agree that someone else will keep the records. They will need evidence to demonstrate that the share of income they declare for tax purposes is the appropriate share. In most cases evidence will show that the share matches their share of the beneficial interest in the let property. In some cases it may be evidence that reality of the situation does not match the legal form of the arrangements – see PIM1030. The share of income for tax purposes should remain consistent over time except where there is a clear change of circumstances, such as a change in their share of the beneficial interest in the let property.

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 each person owns 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 ownership share in the property. The share of profits and losses for tax purposes must be the same as the share actually agreed. See below for the special rules for spouses and civil partners.

If a customer’s only income from land and property in the UK comes from a jointly owned property, that share alone will form the property business. If an individual has other income from land and property in the UK, whether in their name alone or owned jointly with other people, their share from the jointly owned property will form a part of their property business along with the other income and expenses on any other properties which they own alone. Shares held in a different capacity (partner, trustee, executor) must be kept separate – see PIM1020 (https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim1020).

Jointly owned property: spouses or civil partners

Legislation treats people who are married or in a civil partnership, and who are living together, as entitled in equal shares to income from jointly held property under section 836 of the Income Tax Act 2007 (ITA07). "Living together" is defined by s1011 ITA07.

However, this rule will not apply if one of Exceptions A to F applies – subsection 836(3). The most common exceptions are:
- Both spouses, or both civil partners, have signed a declaration under ITA07/S837 (income tax form 17) stating their beneficial interests in both the property and the income arising from it. However, a declaration is only valid if their interests in the income and in the property itself correspond – Exception B.
- There is a partnership – Exception C. In this case the income is divided according to the terms of the partnership agreement.
- The income arises from furnished holiday lettings - Exceptions D and DA. Note that the furnished holiday lettings rules cease to apply in tax years commencing on or after 6 April 2025 for Income Tax and for Capital Gains Tax, and 1 April 2025 for Corporation Tax and for Corporation Tax on chargeable gains.
- Income to which a person is beneficially entitled is treated by an income tax provision as taxable income of another joint owner, or a third party – Exception F.
Further guidance can be found at TSEM9800 (https://www.gov.uk/hmrc-internal-manuals/trusts-settlements-and-estates-manual/tsem9800) onwards.

Jointly owned property: partnership

An individual may jointly own properties which are let out as part of a partnership business. This might occur where:
- they are in a trading or professional partnership which also lets some of its land or buildings (but see BIM41015 (https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim41015) about the inclusion of rents from the temporary letting of surplus business accommodation in the trading or professional profit)
- they are in a partnership which runs an investment business which does not amount to a trade and which includes, or consists of, the letting of property.
A partnership property business of either type is treated as a separate business from any other property business carried on by the individual partners on their own account. Each partner’s share of the profits or losses arising from the partnership property business cannot be added to or subtracted from any individual property business profits or losses. If individuals are in more than one partnership, each is dealt with as a separate property business and the profits of one cannot be set against the losses of another.

Property income received by a farming partnership treated as undertaking a single farming trade is property income of the partnership, not of individual partners – see ITTOIA05/S859(2) and CTA09/S1270(2).

Partnership: example

Simon owns a holiday cottage and a garage both of which he rents out on a commercial basis. He is also a partner in a haulage business, which owns buildings let out to other traders.

In this case Simon runs two different property businesses:
- the first is his own property business consisting of the cottage and the garage
- the second is the partnership property business consisting of the let trading premises.
Simon's share of the profits or losses from the partnership property business must be kept separate from his other property business. He will need to report the profits or losses for each business separately for income tax purposes.

Property jointly owned by individuals and companies

Under section 2 of the Corporation Tax Act 2009 (CTA09) companies are liable to corporation tax on their profits except where they receive income in a fiduciary capacity (CTA09/S6) or under a trust (CTA09/S7). A company’s profits are established by generally accepted accounting practice – see CTA09/S46, applied to property businesses by CTA09/S210 (PIM1106 (https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim1106)).

Where membership of a partnership includes both individuals and companies the partnership agreement should provide for how income is divided between the partners, as above.

It is unusual for individuals to jointly own property with companies outside a formal legal partnership. If it is not possible to apply ITTOIA05/S271 (for the individual) and CTA09/S2 (for the company) to achieve a just and reasonable outcome you should seek advice from Business, Assets and International.