TSEM9828 - The 50/50 rule - asset first put into joint names
Income from property is split 50/50 from the date it is put into joint names.
Example 1 - all income arises after the property is put into joint names
John held a building society account in his own name before he got married on 3 June 2020. From 8 June 2020 the account is held in joint names with his spouse. Interest arises on the following dates
| Date interest arises | Amount |
|---|---|
| 30 June 2020 | £500 |
| 31 December 2020 | £600 |
| Total | £1,100 |
All the interest arose after 7 June 2020; so the total interest for 2020-21 is split 50/50 between the couple.
Example 2 - income arises before and after the property is put into joint names
Jackie held a building society account in her own name before she formed a civil partnership by registration on 15 September 2020. From 20 September 2020 the account is held in joint names with her civil partner Karen. Interest arises on the following dates
| Interest arising dates | Amount |
|---|---|
| 30 June 2020 | £500 |
| 31 December 2020 | £600 |
Jackie is taxed on all the income that arises up to 19 September 2020 and on half the income that arises thereafter. That is
| Interest | Percentage | Amount |
|---|---|---|
| 500 | 100% | £500 |
| 600 | 50% | £300 |
| Total | - | £800 |
Karen is taxed on half the income that arises from 20 September 2020. That is, £600 x 50% = £300.
Between them the couple are taxed on all the income that arises in 2020-21; that is, £800 + £300 = £1,100.