BTL - house in one name, income to another

Froggitt

Is it possible/legal to have a house in one persons name e.g. Mrs Smith, and to have the BTL income go to Miss Smith, who is a student (18) and has no/minimal income of her own? Say the BTL income is £10k p.a., would Miss Smith get all that tax free?

marliepanda

No.

Income would go to the owner.

Kynthia

I doubt it as it looks like a tax dodge as if Mrs a Smith wants to give Miss Smith money it should be from taxed income. One of the experts should comment soon with the exact facts. Out of interest which person would be paying the mortgage and other expenses such as repairs and gas certificate?

Froggitt

Mrs Smith wouldn't give the money to Miss Smith.......Miss Smith would get it directly from the renters. There would be no mortgage, and repairs and gas certificate would be paid for out of the money that Miss Smith would be getting from the renters.

Annie1960

Anyone can give anyone else whatever they want. But that is not really your question, is it? The subtext to your question is about tax.

You need to contact HMRC and ask them.

Froggitt

Yes re tax. Miss Smith has a £10k tax allowance that it would be wise to utilise.

Annie1960

Froggitt wrote: »

Yes re tax. Miss Smith has a £10k tax allowance that it would be wise to utilise.

This is missing the point.

Your question is really whether Mrs Smith needs to pay tax first, then give the net money to Miss Smith.

Contact HMRC and ask them. It's much easier to get through to them at 8am when they open.

Froggitt

Stormy_Petrel wrote: »

If Mrs Smith got a second job and gave all the income to Miss Smith, the income would still be considered Mrs Smith's for income tax purposes. I would have thought this would be the same, but, as Annie says, you need to check with HMRC if you want to be sure (and you really need to be sure before you do this).

Indeed. So my thought was that its not income in the way income tax is e.g. there's no NI etc. Its investment income that we would like to go directly to Miss Smith.

ognum

Froggitt wrote: »

Indeed. So my thought was that its not income in the way income tax is e.g. there's no NI etc. Its investment income that we would like to go directly to Miss Smith.

Income belongs to the person to whom the property belongs so answer is no.

have you considered transferring the property to Miss Smith name? Of course this may have a CGT implication to you.

G_M

I already do this.

When I started my current job, my employer asked me for my bank details and NI number.

I gave him my (student) daughter's details for both.

I work, but my daughter gets the salary, which is taxed at her (lower) rate.

In this way I save myself having to subsidise her, as I would otherwise have to do, out of my (higher-rate taxed) income.

We also have an arrangement whereby she pays for my annual car, home, travel & life insurance - again using the untaxed income.

Problem?

CWSmith

How does that work then? I'm no expert but surely your NI number is 'attached' to your date of birth, so isn't this ultimately going to affect your pension and who-knows-what-else.

I couldn't comment as to whether this is moral or immoral but I'll give you 10-out-of-10 for being enterprising!;)