Q&As

Does section 836 of the Income Tax Act 2007 (ITA 2007) apply to all types of property, such that if a husband and wife own assets other than land jointly (eg a shared portfolio), they will be treated as receiving the income in equal shares unless (a) they actually own it in unequal proportions and (b) they have made a declaration to HMRC to that effect?

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Published on LexisPSL on 10/07/2017

The following Private Client Q&A provides comprehensive and up to date legal information covering:

  • Does section 836 of the Income Tax Act 2007 (ITA 2007) apply to all types of property, such that if a husband and wife own assets other than land jointly (eg a shared portfolio), they will be treated as receiving the income in equal shares unless (a) they actually own it in unequal proportions and (b) they have made a declaration to HMRC to that effect?

For the purposes of the Q&A, we have assumed that the so-called ‘50:50 rule’ applies to the income from assets held jointly by husband and wife (or, where appropriate, civil partners). The rule is that, subject to exceptions, such income is generally treated as belonging to the husband and wife equally and taxed accordingly (even if they have contributed to the acquisition of the income producing asset in unequal shares).

In appropriate cases, the parties may wish to declare that a greater share of the income goes to the spouse paying income tax at a lower rate than the other. If so, the declaration must relate to both the income and the capital, because the income cannot be shared in different proportions to the capital. Where the declaration is made

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