Tenants in common is a way for two or more people to own a property together in which each owner holds a distinct share, the shares can be unequal (for example 70:30), and each owner can leave their share in their will. The alternative, joint tenancy, gives everyone equal rights to the whole property and passes it automatically to the surviving owners on a death. The choice also has tax consequences: married couples and civil partners are taxed on rental income 50:50 by default, but tenants in common with genuinely unequal shares can elect to be taxed on their actual shares using Form 17, which must reach HMRC within 60 days of the declaration.
Tenants in common vs joint tenants
| Joint tenants | Tenants in common | |
|---|---|---|
| Shares | Equal rights to the whole property | Distinct shares, which can be unequal |
| On death | Passes automatically to the surviving owners | Passes under the owner's will or the intestacy rules |
| Can you leave it by will? | No | Yes |
| Typical use | Couples who want the survivor to own everything | Friends, family investors, second marriages, couples who contributed unequally |
You choose the type of ownership when you register the property with HM Land Registry. The shares of tenants in common are usually set out in a declaration of trust, also called a trust deed. Without one, disputes about who paid what can be hard to resolve, so a declaration is worth having even where the shares are equal.
Changing from joint tenants to tenants in common
Converting a joint tenancy into a tenancy in common is called severance. You can do it without the other owners' agreement:
- Serve a notice of severance. Give written notice to the other owners, leave it at their last known address, or send it by registered post or recorded delivery;
- Apply for a Form A restriction. Use form SEV (or RX1 if you cannot provide the evidence SEV asks for) so the register shows the property is held in shares;
- Send it to HM Land Registry's Citizen Centre. There is no fee.
Severance is common on separation or divorce, when one owner wants their share to go to someone other than the ex-partner. Going the other way, from tenants in common to joint tenants, needs all owners to agree and a new or updated trust deed. Ownership type can also change without you knowing, for example if a co-owner becomes bankrupt.
Income tax on rental income
Unmarried co-owners are generally taxed on the rental profit they are entitled to or actually receive. HMRC's Property Income Manual stresses that the test is who is "receiving or entitled to the profits", which does not simply follow land law: if one owner runs the letting and keeps all the income while the other is just a name on the deeds, the first owner may be taxable on all of it.
Married couples and civil partners who live together are different. Under section 836 of the Income Tax Act 2007 they are treated as entitled to income from jointly held property in equal shares, whatever their real ownership. To be taxed on actual shares they must:
- Own the property unequally. The beneficial interests must actually be unequal, which in practice means holding as tenants in common with a declaration of trust;
- Split the income the same way. The income shares must match the property shares;
- Send Form 17 in time. Notice must be given to HMRC within 60 days beginning with the date of the declaration, with evidence such as the trust deed. It applies to income arising from the date of the declaration, not retrospectively.
Until 5 April 2025 the 50:50 rule did not apply to furnished holiday lettings. That exception has been withdrawn, so from 6 April 2025 holiday lets owned by spouses follow the same 50:50 default and Form 17 rules.
Worked example
Illustration. Sam and Alex are married. Alex pays higher-rate tax on a salary; Sam has little other income. They own a buy-to-let producing £20,000 a year of rental profit.
- As joint tenants, or with no Form 17. Each is taxed on £10,000, so £10,000 is taxed at Alex's higher rate;
- As tenants in common 90:10 in Sam's favour, with Form 17. Sam is taxed on £18,000 and Alex on £2,000, so far more of the profit falls into Sam's personal allowance and basic-rate band.
The catch is that Sam must genuinely own 90% of the property, including 90% of any sale proceeds. Transferring a share between spouses who live together is treated for capital gains tax as giving rise to neither a gain nor a loss, but it is a real transfer of value and it should be documented properly. Our guide on tax on rental income covers the rest of the calculation.
Capital gains tax and inheritance tax
- Capital gains tax. On a sale, each owner is taxed on the gain on their own share and can set their own annual exempt amount, £3,000 for 2026/27, against it. Our guide to reporting CGT on UK property explains the deadlines;
- Inheritance tax. A person's beneficial share of joint property forms part of their estate for inheritance tax, whether it passes by survivorship or by will. Joint tenancy does not take a share outside the estate;
- Spouse exemption. A share left to a spouse or civil partner is generally exempt, whichever form of ownership is used. Tenancy in common matters more when you want your share to go to children or others, for example in a second marriage.
Which should you choose?
Joint tenancy is simple and suits couples who want the survivor to inherit everything. Tenants in common suits co-owners who contributed different amounts, investors buying with friends or family, and couples who want to control where their share goes or to allocate rental income efficiently. In every case, put the shares in writing in a declaration of trust and make sure your will matches.
Sources: GOV.UK: Joint property ownership; Income Tax Act 2007, s.836 and s.837; HMRC Form 17; HMRC PIM1030; HMRC IHTM15012; TCGA 1992, s.58.
If you are buying with someone else or want to change how rental income is split, our accountants for landlords can model the tax, and our inheritance tax planning team can check how your ownership fits your will.