Question about working tax credit

Andrew_001

I receive approx. £45 per week of working tax credit. I am thinking of buying a small apartment for my son. The plan is that the rent he pays will help to pay the mortgage on the apartment. I presume that the rent will count as income in the calculation of my working tax credit. However, for working tax credit purposes, will I be penalized simply by virtue of the fact that I own that apartment? So, in other words, would simply owning the apartment, regardless of the rent, affect my working tax credit?

Icequeen99

No, owning it per se wouldn't affect WTC. However WTC is going to be replaced in the next couple of years by UC and it would affect that because Universal Credit will use benefit rules.

Rent would affect WTC but only in so far is is taxable - so whatever figure you declare as your profit on your tax return (after expenses) would be declarable as income for tax credits.

IQ

Pedent

Icequeen99 wrote: »

No, owning it per se wouldn't affect WTC. However WTC is going to be replaced in the next couple of years by UC and it would affect that because Universal Credit will use benefit rules.

It's worth adding that if you have substantial savings then not buying the flat won't necessarily mean that you get more UC. UC will be reduced if you have over £6k of capital, and removed completely if you have over £16k, no matter what form the capital is in (unless it's in a pension or the house you live in).