Spouses and civil partners that jointly own furnished holiday lets (FHLs) could previously divide up the surplus between them and therefore allocate most if not all to the lower rate spouse with sometimes a considerable saving in tax.

Properties that qualified as FHLs are now subject to income tax and capital gains tax in the same way as for other residential properties.

From 6 April 2025 onwards, the default position is that they are taxed 50:50. This could result in increased tax liabilities for the couple overall.

Consider using form 17.

Couples who find themselves in this position may wish to consider making a joint declaration of beneficial interests in property and income to HMRC using form 17 which enables each spouse/partner to be taxed by reference to their share of the property, not on a 50:50 basis.

Income from the property is taxed in accordance with form 17 from the date that it was signed by the last spouse or civil partner to sign it, provided it reaches HMRC within 60 days. Form 17 does not apply to income that was received before the couple signed it. A form 17 that is received late (i.e., later than 60 days) is invalid.

A number of conditions apply to use form 17, including that the spouses/civil partners own the property in unequal shares. Evidence demonstrating the capital ownership shares, for example, a declaration or deed, should be submitted alongside form 17.

It should be noted that form 17 does not change the ownership split of the property, it simply confirms to HMRC what the capital ownership split is and that the couple want the income split to mirror the capital split. If you want to change the capital ownership split, you should seek legal advice.