Whether married, in a civil partnership or partners, two people in a relationship often share additional income. Most commonly, it’s from a property they rent out, but it can also come from a side-hustle business they run together, dividends they receive, savings interest or capital gains made from selling assets.
When such income first arises, naturally, spouses and partners wonder about how to report it to HMRC, so that they can pay any tax due. In other countries, including the USA, Canada and many European countries, shared income can be reported jointly via one tax return. But according to Mike at GoSimpleTax that’s not the case in other countries, where individual filing is required. That includes the UK.
HMRC’s view on shared income
- In the UK, every person is taxed individually, even if they’re married or in a civil partnership. The UK does not have joint tax returns for couples.
- HMRC views each person’s income and tax liability separately, regardless of their relationship status.
- So, if you receive taxable income and need to report it via Self Assessment, you must file your own Self Assessment tax return and your spouse or partner will also need to file their own.
Need to know! If only one partner or spouse earns additional taxable income (eg from owning shares or from savings interest), only they have to file a Self Assessment tax return, the other partner does not.
How much can you earn tax-free?
- Both members of a couple each get a £1,000 annual tax-free trading allowance. So you can both earn £1,000 each, perhaps from a side-hustle, without having to pay any tax. However, you cannot claim any tax expenses if you claim your trading allowance, so you need to work out which option is most tax-efficient.
- Both members of a couple each also get a £1,000 annual tax-free property allowance, enabling both to earn up to £1,000 each without paying any tax on their rental income. Once again, you cannot claim any tax expenses if you claim your property allowance, so work out which option is most tax-efficient.
- Each member of a couple also gets a Personal Allowance of £12,570 (2025/26 tax year) and no tax is payable until they earn over this threshold.
What if you own a rental property with your spouse or partner?
If you own a rental property with your spouse or partner, the tax you pay will be determined by your share. Normally, rental income is split and taxed 50/50 (ie both spouses or partners pay tax on their half of the total rental profit after expenses have been deducted). If you want to claim unequal ownership, you must provide proof to HMRC.
What if spouses or partners are in an ordinary partnership?
The partnership itself does not pay tax, but an annual partnership tax return (SA800) must be submitted to HMRC. This shows the partnership’s total profit and how that profit is divided between the partners.
Each spouse or partner reports their share of the partnership profit via their own Self Assessment tax return, as well as supplementary pages SA104S. They’re taxed on that income as if they were self-employed (ie they pay Income Tax and National Insurance contributions where due). Unlike rental property, there’s no automatic 50/50 rule, it’s whatever is stated in the partnership agreement.
About GoSimpleTax
Record Income, Expenses and tax submission all in one.
GoSimpleTax is the solution for non-residency returns, the self-employed, sole traders, freelancers and anyone with income outside of PAYE.
The software will provide you with hints and tips that could save you money on allowances and expenses you may have missed.
Get started with GoSimpleTax today, it’s free to try.