Newbi tax question regarding rental income

Money_tree_2

I have just purchased a shop which will be rented out is it possible for my father who all ready has shops and has accountant etc in place to collect the rent and pay the taxes?

Then gift us what's left as I know he and my mum can give gifts tax free?

purdyoaten

It's your shop and, therefore, your rent. Not possible.

Money_tree_2

what would happen if the rent was being collected and kept by someone else? My presumption which is probably now wrong was that the person that gets the money would be responsible for tax. What if he was to collect the rent and then not gift us and just keep whats left after tax?

booksurr

Money_tree wrote: »

what would happen if the rent was being collected and kept by someone else? My presumption which is probably now wrong was that the person that gets the money would be responsible for tax. What if he was to collect the rent and then not gift us and just keep whats left after tax?

the income belongs to the owner, and only on that basis does the tax liability follow the income, it is not based on who receives the cash in the context of rental profits

if you want your parents to receive the income then they will have to become owners....
if you parents then receive the money but fail to pay you then the consequences are:

a) your parents and you will each owe tax on whatever you have agree will be your respective shares of the rental profit
or
b) if your parents are not owners but continue to receive the cash you and you alone remain liable for all the tax as they are simply acting as your "rent collection agents"

c) if your parents fail to pass over the money (or your share of it) you can sue them

a) and b) are totally independent of c)!!!!!

your position is no different to the classic case of the husband wanting his wife to bear the tax liability for the rental profit as she is on a lower tax rate than he, but the income cannot be transferred unless she is also an owner of the property in question. If it is in his sole name she cannot have any of the income

Money_tree_2

thank you both for this help very much appreciated.