Income not declared...affect on tax credits

terryw

A friend has a problem.

Four years ago he bought a house on mortgage for his father to live in. He has been paid HB from the local authority. He genuinely took the view that there was no profit as the HB did not cover the mortgage payments. HMRC have now pointed out to him that only the interest is claimable against tax. It is a relatively simple matter to prepare accounts for the four tax years involved. Does he need to inform the tax Credit people separately or will this be taken into account in the computation of tax due by HMRC?

nearlyrich

I may be wrong but I was under the impression that HB was not payable when renting from a family member so maybe his problem is bigger than he thinks.

terryw

nearlyrich wrote: »

I may be wrong but I was under the impression that HB was not payable when renting from a family member so maybe his problem is bigger than he thinks.

Thanks but HB is payable to a family member providing that it is a genuine commercial tenancy. The HB people were fully aware of this aspect. Thanks anyway.

alwaysonthego_2

terryw wrote: »

Thanks but HB is payable to a family member providing that it is a genuine commercial tenancy. The HB people were fully aware of this aspect. Thanks anyway.

As you say LHA/HB can be payable to a family member aslong as you do not live together and it is commercial and a agreement is in place.

He would need to inform TCO but they only need to declare any interest over £300 in a year.

terryw

Thanks very much Jimmo. Exactly what I needed clarifying. I have made a deposit in the Karma Bank for you.