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When is an HMRC form 17 used?

The Income Tax Act 2007 ensures that couples (married or civil partnerships) can legally divide any income from properties they own jointly. There might be situations where landlords do not want to split income evenly, and that’s when the Form 17 comes in.

Form 17 is used to declare each individual’s interests relating to a property and overall income, and it is sent to HMRC with proof that the interests are not equal. The main benefit of this arrangement is that the individual with a higher income might be in a lower tax bracket than their partner, therefore saving the couple money overall.

Both partners must agree for the Form 17 declaration to be valid. If agreement is not reached, the equal 50/50 split is held. The document can only be used if the individuals involved are entitled to unequal shares of the income from the property. That applies to anything that varies from the straight division of 50/50, and must match the same split as the shares in the property.

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Making a declaration with a Form 17

Form 17 is the only documentation HMRC will accept to make this declaration about a couple’s individual interests. Each must sign and date the declaration on the form for it to be validated before submitting it.

The form outlines details of the property and income from it, and each individual’s interest in it. Property cannot be added afterwards; a new declaration must be signed for property purchased at a later date.

If the split changes, except to a 50/50 split when the Form 17 is not applicable, then a new declaration must be signed. The number of forms signed is not limited.

Situations where the Form 17 is not to be used

There are some exceptions where it is not acceptable to use a Form 17. These include income from holiday accommodation let for commercial purposes, or from close company shares. It would also not apply unless the property is held in uneven shares.

The Form 17 is only applicable to married couples or civil partners and cannot be taken out by others, even if they are family members. There are sometimes exceptions where a couple is married or in a civil partnership but not living together.

Other information about the Form 17

All declarations are valid from the date they were signed by the partner who signed most recently, although it must also be submitted to HMRC within 60 days of that date otherwise it becomes invalid. The form will need to be re-signed and resubmitted if it is still required.

Once validated, the Form 17 will remain in place until the couple’s status changes, without the need to update it. Changs may occur, for example, where the couple separates, or one partner dies. Form 17 cannot be undone merely because a couple changes their mind; there would need to be a material change in their circumstances. In the event of the death of one partner, the split reverts to 50/50 with whomever is the named beneficiary. Any income that person subsequently earns is taxable in the usual way.

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We advise that you always seek advice from professional experts such as Ascot solicitors Parachute law https://www.parachutelaw.co.uk/ https://www.parachutelaw.co.uk/. You can also read more about Form 17 on the government website

It is always worth revisiting your previous advice any time your situation changes. Legal experts and financial advisers are on hand to advise on any elements relating to your tax affairs. It may be worth having your portfolio reviewed today to understand if there are tax savings you could be making.

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