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You should have registered for self-assessment when you started to let the property unless the net income was less than £2,500 per part-owner in which case any tax due could have been collected through your tax code if you have income sources subject to PAYE which you say you have. Take a look here for information on letting income and tax. There is also a section on expenses.Complete the form to register for self-assessment which you need to do in relation to your child benefit claim in any event. As far as the rental income is concerned, you should draw up an income and expenditure account for each tax year that the property has been let and then write a letter to the tax office explaining the situation and explain your misunderstanding of which part of your mortgage payments you can offset and that you wish to get things straightened out as soon as possible. You should also point out that the income was low enough to have the tax collected through your tax codes so you don't consider that you needed to register for self-assessment for the earlier years. The tax office will assess any tax that is due, they will charge interest from when the tax should have been paid and may charge a penalty for late notification. You can read about the old and new penalty regimes here and here. Approaching the tax office about the rental income before they find you will help you in keeping penalties to a minimum.
The income should be split in proportion to your ownership shares. You will each pay tax based on your individual tax rates.You might consider employing an accountant or tax adviser to deal with the tax office for you, especially if you are unfortunate enough to have an overly officious tax office individual dealing with your case.I hope this helps but let me know if you have any further questions.