Joint Property and Inheritance Tax UK (2026)

How joint ownership works in England & Wales

When two or more people own a property together in England and Wales, they hold it in one of two ways:

Feature	Joint tenants	Tenants in common
Shares defined?	No — equal, undivided interest	Yes — can be 50/50 or any split
On death, share passes to …	Surviving owner(s) automatically	Whoever is named in the will (or intestacy)
Governed by will?	No — will cannot override survivorship	Yes — fully disposable by will
IHT on death?	Yes — half (or equal share) in estate	Yes — declared share in estate
Common for …	Married couples	Business partners, unmarried couples, families

The survivorship rule and IHT

Under the right of survivorship (the jus accrescendi), when a joint tenant dies their interest automatically vests in the surviving owners. This happens outside the will — the deceased’s share is not a “gift” in the probate sense.

However, HMRC does not ignore this transfer for IHT. Under IHTA 1984 s4, the deceased’s share is included in their estate at death and charged to IHT in the usual way. If the surviving owner is a spouse or civil partner, the spousal exemption (IHTA 1984 s18) prevents any IHT charge. If the co-owner is a child, sibling, or cohabiting partner, IHT may be due if the estate exceeds the nil-rate band.

How is the deceased's share valued?

The value of the deceased’s share is based on the open-market value of that share at the date of death. For joint tenants (equal shares), this is typically 50% of the full property value.

For tenants in common, the valuation depends on the declared percentage in the title register and any deed of trust that sets out the beneficial interests.

Minority discount for tenants in common

Where the deceased owned a minority share of a property with an unconnected co-owner, HMRC may accept a discount of 10–15% on the arithmetic share value. A 50% share in a property worth £400,000 might be valued at £170,000–£180,000 (not £200,000) on the basis that a partial interest is less marketable than the whole property.

This discount does not apply between spouses and civil partners. HMRC views their shares as fully liquid due to the spousal exemption and the ability to sell as a unified whole.

IHT on jointly owned property between spouses

The spousal exemption (IHTA 1984 s18) is unlimited for transfers between UK-domiciled spouses and civil partners. A property passing by survivorship (joint tenants) or by will (tenants in common) to the surviving spouse is entirely exempt from IHT — regardless of value.

However, deferring IHT to the second death can increase the overall bill. Each spouse has their own nil-rate band (£325,000) and residence nil-rate band (£175,000). If the first spouse’s entire estate passes to the survivor, the first spouse’s NRB is unused — though it can be transferred to the survivor under the transferable NRB rules (IHTA 1984 s8A). The combined threshold for a couple in 2026/27 can be up to £1 million.

Using tenants in common for IHT planning

Married couples sometimes change from joint tenants to tenants in common so that the first spouse’s share can be left — via the will — to a nil-rate band discretionary trust (NRBDT) rather than directly to the survivor.

A NRBDT uses the deceased’s NRB to “absorb” the share without IHT, and the trust assets are not included in the survivor’s estate on the second death. This was a popular planning technique before the transferable NRB was introduced in 2007. It remains useful when:

The estate is likely to exceed £2 million (where the RNRB begins to taper).
One spouse has significantly more assets than the other and there is concern the transferable NRB will be lost.
There are children from a previous relationship and the testator wants to protect their share.

A property protection trust is a related structure that also uses a change to tenants in common to protect a share of the home for children while the survivor continues to live in the property.

Joint property and the residence nil-rate band

The residence nil-rate band (RNRB) of £175,000 per person is available when a qualifying residential property passes to a direct descendant (children, grandchildren, stepchildren). For jointly owned property, each owner’s share separately qualifies for the RNRB on their respective death — provided the share passes to direct descendants.

If a family home worth £800,000 is owned equally by a married couple as tenants in common and both spouses leave their shares to their children, each estate can use the RNRB of £175,000. Combined with two NRBs (2 × £325,000) and two RNRBs (2 × £175,000), a couple can shelter up to £1 million before IHT is due.

Joint property owned with non-spouse co-owners

Where property is jointly owned by siblings, friends, cohabiting partners, or business partners, there is no automatic IHT exemption. The deceased’s share is chargeable. Key issues:

Unmarried couples: A cohabiting partner is not a spouse and gets no spousal exemption. IHT can be due even when the survivor continues to live in the property. The estate may need to sell the property to pay the tax bill.
Family co-ownership: Parents and children often own property together to help with first purchases. The parents’ shares are in their estate on death; the children’s shares are in theirs. Each share is valued independently.
Business property: Jointly owned business property may qualify for Business Property Relief (100% for qualifying businesses), removing it from the IHT calculation entirely.

How to sever a joint tenancy

A joint tenancy can be converted to tenants in common at any time by serving a notice of severanceon the other co-owner(s). The notice does not require the other owner’s consent — it is a unilateral act. It must:

Be in writing.
Be delivered to the other joint tenant(s).
Clearly state the intention to sever.

After severance, the Land Registry title should be updated to show the new tenancy in common. Both owners will need to update their wills to deal with their now-separate shares. Severing the joint tenancy alone does not trigger IHT — it is simply a change in how the property is held.

Frequently asked questions

Is jointly owned property included in my estate for IHT?

Yes, your share of any jointly owned property forms part of your estate for IHT. For joint tenants, that is an equal share (e.g. 50% of a property owned by two people). For tenants in common, it is your declared percentage share. The value is based on the open-market value of your share at the date of death, which may attract a minority discount of 10–15% if the co-owner is unconnected.

Does the survivorship rule avoid IHT?

No. When a joint tenant dies, their share automatically passes to the surviving owner under the survivorship rule — but HMRC still treats that half as part of the deceased's estate and charges IHT if the estate exceeds the nil-rate band. The only reason married couples/civil partners avoid IHT on property passing this way is the spousal exemption — not the survivorship rule itself.

Can tenants in common reduce IHT?

Changing from joint tenants to tenants in common (a 'severance of joint tenancy') allows each owner to leave their share by will rather than automatically to the survivor. This is useful for IHT planning: a deceased spouse can leave their share to a discretionary trust (using their nil-rate band) instead of the survivor, potentially sheltering it from IHT on the second death.

What is the minority discount on a jointly owned property?

Where a deceased owned a share in a property as a tenant in common with an unconnected person, HMRC may accept a valuation lower than the arithmetic share (e.g. 45% of value instead of 50%) because a partial share is harder to sell. Courts have allowed discounts of around 10–15%. This discount does NOT apply when the co-owner is a spouse or civil partner.

Does the residence nil-rate band apply to jointly owned property?

Yes, provided the property is the deceased's main residence (or has been at some point since 2015) and it passes on death to direct descendants. The RNRB is £175,000 per person (2026/27). For a jointly owned home passing to children, each owner's share can use the RNRB on their respective death, giving couples a combined £350,000 on the family home on top of the two nil-rate bands.

What if a co-owner is not a spouse — are there IHT reliefs?

No automatic exemption applies between co-owners who are not married or civil partners (e.g. siblings, friends, or unmarried couples). Each owner's share falls into their own estate. To avoid a large IHT charge on the first death, co-owners might consider tenancy-in-common deeds, life insurance written in trust, or property protection trusts — though professional advice is essential.

Can I sever a joint tenancy before death to reduce IHT?

Yes. A joint tenancy can be severed at any time while both owners are alive, converting the ownership to tenants in common. This must be done formally (a written notice of severance given to the other owner, and updating Land Registry records). Severing the tenancy itself does not trigger IHT — it is the death that creates the taxable event — but it opens the door to IHT planning via the will.

Plan your jointly owned property in your will

WillSafe’s DIY will kit is designed for property owners in England & Wales. Handle joint tenancy, tenancy in common, and RNRB clauses — all from home.

Get the will kit →

Related guides

Disclaimer: This article provides general information only and does not constitute legal or tax advice. IHT valuations and planning structures are complex and depend on individual circumstances. Always consult a qualified solicitor or tax adviser before making structural changes to property ownership. WillSafe serves England & Wales only.