The standard tax treatment for couples living together, whether married or in a civil partnership, is that income from jointly held property is split equally (50:50) between them, regardless of their actual ownership shares.

However, if the ownership is unequal and the couple wishes to have the income taxed in proportion to their respective beneficial interests, they must formally notify HMRC. This is done by submitting HMRC’s Form 17, which declares the true beneficial ownership split of the property and the associated income.

A Form 17 declaration can only be submitted by spouses or civil partners who are living together and jointly own property in unequal shares. It does not apply to unmarried couples, those who are separated, or other relationship types.

The declaration must be agreed upon and signed by both parties. If one partner does not consent, the income will continue to be taxed on a 50:50 basis, regardless of how the property is actually owned.

Once accepted by HMRC, a Form 17 declaration remains effective until there is a change in the couple’s relationship status (e.g., separation or divorce) or in the ownership structure of the property. In such cases, the default 50:50 split will be reinstated.

It is important to note that Form 17 cannot be used in certain situations—for example, when property is owned as beneficial joint tenants, or where the income derives from shares in a close company or a business partnership.

Where applicable, submitting Form 17 can provide valuable tax advantages by aligning the taxation of property income with the actual economic ownership.

We would be happy to help you ensure you are making the most of your property income structure, please call if you would like to discuss your options.

Homeowners can earn up to £7,500 tax-free under the rent-a-room scheme, with simple reporting and flexible tax options.

This set of special rules is designed to encourage individuals to make use of spare space in their property by providing a tax exemption on rental income of up to £7,500 per tax year.

If the total rental income from lodgers does not exceed the £7,500 threshold, the exemption applies automatically, with no need to file a tax return or report the income to HMRC. This makes the scheme particularly appealing for those seeking a simple way to supplement their income without added paperwork. However, if you prefer, you can opt out of the scheme and instead declare property income and expenses in the usual way.

The relief is only available for furnished accommodation and typically applies when a homeowner rents out a bedroom to a lodger within their main residence. One of the key benefits of the scheme is that it not only allows for tax-free earnings up to the threshold but also reduces the overall tax and administrative burden for participants. If the property is jointly owned and both parties receive rental income, the £7,500 limit is halved to £3,750 per person.

It is important to note that the rent-a-room limit covers not just rent, but also any additional payments received for meals, laundry, or cleaning services provided to the lodger. If your gross receipts exceed the threshold, you have a choice: you can either pay tax on the actual profit (gross rents minus allowable expenses and capital allowances) or choose to be taxed on the total gross receipts minus the £7,500 allowance, with no deduction for expenses or allowances. This flexibility helps taxpayers to choose the most tax-efficient method depending on their specific circumstances.

Paper tax returns are due 31 October 2025, and new registrants must notify HMRC by 5 October 2025. Act early to avoid penalties.

Firstly, the deadline for submitting paper self-assessment tax returns is 31 October 2025. If you miss this deadline a £100 late filing penalty will usually apply, even if no tax is due, or if any tax owed is paid in full by the final deadline of 31 January 2026.

Further penalties increase the longer the return remains outstanding. If your return is still not filed three months after the deadline, daily penalties of £10 per day (up to a maximum of £900) will be charged. If the delay extends to six months or more, further fixed or percentage-based penalties may apply, significantly increasing the cost of non-compliance.

We strongly recommend that anyone still submitting paper returns consider switching to the online filing system. Filing electronically not only simplifies the process but also gives you an extra three months, with the deadline for online returns falling on 31 January 2026.

The second key deadline is 5 October 2025. This is the date by which you must notify HMRC if you need to complete a self-assessment return for the 2024–25 tax year and have not previously been required to file one. Failing to register in time can lead to penalties for late notification, even if you file your return on time later.

Being aware of these October deadlines and taking timely action can help you avoid unnecessary stress and potential fines if you were unprepared.

Not all casual payments are tax-free; HMRC’s miscellaneous income rules may apply depending on the circumstances.

The special miscellaneous income rules sweep-up provisions that seek to charge tax on certain income. This unusual provision, which is broad in scope, catches income that would not otherwise be charged under specific provisions to Income Tax or Corporation Tax.

A casual payment may be considered taxable miscellaneous income when it is received as a reward for a service that was performed under some form of agreement, arrangement, or common understanding that payment would be made.

This is different from a genuine gift or token of appreciation given voluntarily after a service, where there was no agreement, arrangement or common expectation for such a reward. These gifts are not taxable under the same provisions.

The distinction can be difficult to define. For example, in Brocklesby v Merricks (1934), the court highlighted the importance of an arrangement or entitlement to a share of earnings to make a receipt taxable. As a result, it is essential to review the specific circumstances of each case to determine whether a payment qualifies as taxable income or a non-taxable gift.

Businesses over £90,000 turnover must register for VAT, but HMRC may grant exceptions if the increase is temporary.

A business must register for VAT if either of the following applies:

1. At the end of any month, its taxable turnover in the previous 12 months has exceeded £90,000; or
2. At any point, it is reasonable to expect that taxable turnover in the next 30 days alone will exceed £90,000.

If a business temporarily exceeds the VAT registration threshold, they may be able to apply for an exception from VAT registration with HMRC. This applies if their taxable turnover has gone over the threshold in the last 12 months, but the business can show it will not go over the deregistration threshold (£88,000) in the next 12 months. This exception must be applied for by contacting HMRC to request and complete forms VAT1 and VAT5EXC. It’s important to note that this is different from a full VAT exemption.

Once an application is submitted, HMRC will respond within 40 working days to confirm approval or refusal. If approved, the business will not be registered for VAT at that time but will remain required to monitor their turnover monthly in case their circumstances change, and VAT registration is required. If the exception is denied, HMRC will register a business based on the information provided, and the business will be required to account for VAT from the date their liability began.