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Whether you own property as joint tenants or tenants in common affects who inherits your share on death — and how IHT is calculated. For married couples, the difference is usually academic (spouse exemption applies either way). For others, the choice can have significant IHT consequences.
Jurisdiction: joint tenancy and tenancy in common are the forms of co-ownership in England, Wales and Northern Ireland. Scotland does not have them, and the terminology and default rules are different — see “Scotland is different” below. Unless a section says otherwise, this page describes the England, Wales and Northern Ireland position.
Joint tenancy is the most common form of co-ownership for couples buying a home together. The key feature is the "right of survivorship": when one joint tenant dies, their share automatically passes to the surviving joint tenant(s) — regardless of what the will says. The share does not form part of the estate for probate purposes, but it does form part of the estate for IHT purposes.
In practical terms:
That equal split is a feature of joint tenancy in land, not a rule for joint assets generally. For a joint bank account, HMRC works on contributions instead: “You should normally regard each account holder as beneficially entitled to the proportion of the account which is attributable to their contributions” (IHTM15042). If the deceased put in all the money, the whole balance is in their estate even though the account was in two names. For a tenancy in common, HMRC notes that the share “is usually in proportion to the money they put in to buy the joint property”.
With tenants in common, each owner holds a defined share — which may or may not be equal. On death, each owner's share passes under their will or intestacy, not by survivorship.
This gives much greater flexibility:
For married couples or civil partners, the distinction matters less for IHT on the first death — the spouse exemption means transfers between spouses are IHT-free in either case. The surviving spouse becomes sole owner or takes the deceased's share under the will, and either way the transfer is exempt.
However, the structure does affect the second death:
The often-quoted “£1 million for a couple” is two nil-rate bands of £325,000 plus two residence nil-rate bands of £175,000, and it only reaches £1 million if the residence nil-rate band conditions are met — a home, passing to direct descendants, and an estate under the £2 million taper threshold. Where they are, everything passing to the spouse and the unused bands being transferred on the second death is the simplest route, and it is what the transferable nil-rate band exists to do. Where they are not, or where the estate is larger, holding as tenants in common opens other options — with consequences for who can live in the house, so this is a point to take advice on rather than one with a single right answer.
When property is jointly owned with someone who is not a spouse or civil partner — a sibling, friend, or unmarried partner — the spouse exemption does not apply. This creates important IHT considerations.
There is no IHT exemption for unmarried partners. If an unmarried couple owns a property as joint tenants and one dies, the deceased's share automatically passes to the survivor — but is included in the taxable estate. If the estate exceeds the NRB (£325,000), IHT at 40% is due on the excess.
Unlike married couples, there is no transferable NRB or RNRB for unmarried couples. The survivor may inherit the property but face a significant IHT bill.
If the couple holds as tenants in common, the deceased's share passes under the will. They can leave it to the survivor (no IHT exemption for an unmarried partner, but the gift is in the estate anyway), or to children (potentially using the NRB more efficiently).
A share in a property is worth less than the arithmetic fraction of the whole, because a part share is harder to sell. HMRC publishes no percentage for this. Its instruction to caseworkers (IHTM15072) is that for land in England, Wales and Northern Ireland the discount is built into the valuation: the District Valuer “will report the value of the share having allowed for this so you should not accept any further discount”. Any specific figure you see quoted — 10%, 15% — is somebody’s rule of thumb, not a published rate.
Two limits are worth knowing. There is generally no discount for jointly held bank and building society accounts — HMRC says there would be “no reason to think that a discount for joint ownership should be appropriate”. And where the two co-owners are a married couple or civil partners, the joint property is related property under section 161 of the Inheritance Tax Act 1984: the shares are valued together as a whole and the chargeable figure is the proportion of that aggregate, so the discount disappears.
The residence nil-rate band (RNRB) applies where a qualifying residential property passes to direct descendants. For jointly owned property, the RNRB applies to the deceased's share. If the property is jointly owned with the surviving spouse and the first spouse's share passes to the survivor (either by survivorship or under the will), the RNRB is not used — but it transfers to the second estate.
On second death, the RNRB (plus the transferred RNRB from the first death) can apply to the whole property passing to children — giving up to £350,000 of additional threshold for a couple.
Scotland has neither joint tenancy nor tenancy in common. HMRC’s manual (IHTM15091) sets out two arrangements: the joint property rights of trustees and partners, and common property (also called pro indiviso, ownership in individual shares), which is how most jointly held Scottish property is held. Each owner has a separate title to a specific share and can transfer it separately.
The practical consequence is that survivorship is not the default. Where the share passes depends on who provided the property and on what the parties chose — including whether the title contains a special destination (a survivorship destination). If there is no such destination, the share passes under the will or under Scottish intestacy, not to the co-owner.
The same caution applies to joint accounts in Scotland. HMRC (IHTM15051): the fact that an account is in joint names “does not necessarily mean it is held in equal shares. Neither does it mean there is survivorship destination.” The extent of each owner’s interest turns on identifiable contributions. Anyone dealing with a Scottish estate should check the title and take Scottish advice rather than reading across from the England and Wales rules.
In England and Wales it is straightforward to convert from joint tenancy to tenants in common (called "severing the joint tenancy"). This is done by serving a written notice of severance on the other joint owner or owners under section 36(2) of the Law of Property Act 1925, and applying to HM Land Registry to enter a restriction on the title. No consent from the other joint tenant is required. HMRC’s own description of a joint tenancy notes that “each owner can sever or break up the joint tenancy (for example, by giving notice to the other owners)”.
Converting from tenants in common to joint tenants requires all co-owners to agree. A new transfer deed is needed.
Severance between owners who already hold equal beneficial shares changes the form of the co-ownership rather than moving value between them. Where severance is combined with a change in the size of the shares, that is a different transaction and can have capital gains tax and stamp duty land tax consequences — worth checking before it is done.
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