Joint Tenancy vs Tenants in Common
Joint tenancy: all owners hold the entire property jointly — no separate shares; right of survivorship (ius accrescendi) means the deceased's interest passes automatically to the survivor regardless of the will. Tenants in common: each owner holds a defined, separate share; no right of survivorship; each owner can leave their share under their will. The default position without a Declaration of Trust is uncertain — always execute a Declaration of Trust at purchase to record the agreed beneficial shares. Form A restriction at HM Land Registry is required to protect a tenants in common arrangement and prevent overreaching by a sole surviving owner. For income tax, shares follow the beneficial ownership; HMRC defaults to 50:50 for spouses/civil partners regardless of underlying ownership — file Form 17 (with a Declaration of Trust) to apply actual shares. Two tenants in common each have their own annual CGT exempt amount (£3,000 from 2024-25) — planning disposals to use both is an important planning tool.
Severing a Joint Tenancy and IHT Planning
Severance (Williams v Hensman (1861)): a joint tenancy can be severed unilaterally by written notice served on the other joint tenant(s); no consent required; immediate effect. After severance, apply for a Form A restriction at HM Land Registry and execute a Declaration of Trust recording the agreed shares. IHT planning: joint tenancy wastes the nil rate band on the first death (full value passes to the survivor); tenants in common allows the deceased's share to pass to children or a nil rate band discretionary trust, preserving both nil rate bands — on a £600,000 property, this can save £130,000+ IHT on the second death. Act before death: severance after a joint tenant dies has no effect — the right of survivorship operates the moment of death. Always update wills to reflect the intended passing of the share on death and review life insurance to match the ownership structure.