Owner-Managed Businesses

Joint names with spouse or civil partner

Produced by Tolley
  • 08 Nov 2021 07:51

The following Owner-Managed Businesses guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Joint names with spouse or civil partner
  • Legal and beneficial ownership
  • Beneficial ownership
  • Establishing that beneficial ownership differs from legal ownership
  • Form 17
  • Capital gains tax
  • Generally
  • Business property
  • Income tax ― rental income
  • Inheritance tax

Joint names with spouse or civil partner

The decision to hold a property jointly with a spouse or civil partner has consequences beyond taxation. For example, it may change the position on separation or divorce, or allow creditors of the transferee spouse / civil partner to seize the assets. The wider implications of joint ownership must therefore be considered before a decision is taken.

Legal and beneficial ownership

The first step is to establish how the property is currently held. There can be a difference between the legal and beneficial ownership of a property:

  1. the legal owner is the person who has formal legal title to the property. This will normally be recorded by the Land Registry and / or on the property deeds

  2. the beneficial owner has the right to benefit from the property. Beneficial ownership is sometimes known as an 'equitable interest' or 'equitable ownership'.

Where the couple share legal title to the property, each is usually the legal owner and beneficial owner of 50% of the property. However, this is not always the case, see below.

Where only one member of a married couple / civil partnership is the legal owner of a property, he or she may also be entitled to 100% of the beneficial ownership, with the other partner being entitled to nothing.

It is common for the property to be held by one individual on behalf of both members of the couple. In this case, legal ownership lies with one member of the couple, but beneficial ownership is shared between them.

It is normally beneficial ownership, not legal ownership, that matters for tax purposes. Establishing beneficial ownership can be particularly valuable where the couple are seeking to obtain CGT reliefs, or a better allocation of rental income, than would be indicated by the legal ownership of the property.

Beneficial ownership

Beneficial ownership is a question of fact. Family law provides extensive and helpful legal decisions on the question of when a person has beneficial ownership, because unmarried

Access this article and thousands of others like it
free for 7 days with a trial of TolleyGuidance.

Think Tax.
Think Tolley.

Critical, comprehensive and up-to-date tax information

LEARN MORE LEARN MORE

Popular Articles

Reduced VAT rate ― supplies of fuel and power

The supply of fuel and power is treated as a supply of goods for VAT purposes. Supplies are fuel and power are normally liable to VAT at the standard rate. However, providing certain conditions are satisfied, it is possible for suppliers to charge the reduced rate of VAT on certain supplies of fuel

22 Dec 2021 18:49 | Produced by Tolley Read more Read more

Utilising the capital gains tax annual exemption

Taxpayers may wish to consider basic tax planning arrangements in use the capital gains tax annual exemption. This type of tax planning is often reviewed at the end of the tax year.This guidance note first looks at the annual exemption in detail and then various tax planning strategies that might be

27 Oct 2021 19:10 | Produced by Tolley Read more Read more

Transfer pricing rules ― overview

What is transfer pricing?Transfer pricing is the prices at which an enterprise transfers either physical goods, intangible property or services, including financing arrangements, to associated enterprises. Generally, enterprises are associated if there is direct or indirect control by one of the

12 Jan 2022 14:00 | Produced by Tolley Read more Read more