Carers allowance and rental income?

Brighty

Hi all

Currently our eldest receives DLA mid rate care, therefore my wife receives carers allowance. The only other income she currently receives is rental income of approx £4.5k per year taxable.

In Sept, when our youngest starts school, my wife will be able to take on a part time job, so we’re starting to think about what she could do, however we’re not sure if her rental income counts as earnings or not, if it does, then any wages from work would take her over the allowable £110 a week and she’d lose her CA, the upshot of that would be she’d have to work 8 hours a week just to make up what she’s lost, so she'll have to get more hours to make up for it. This could all become irrelevant in November when we have to renew DLA, we could lose it anyway, but we’re wondering what they would make of our situation currently.

I’ve reads the relevant section of the ‘decision makers guide’ shown below, but am none the wiser, as we don’t seem to fit either scenario.

Any way of finding out how we would be viewed, before the wife starts looking for work?

Our situation

Property 1 down south, bought by my brother and I as our home in 2002, but we relocated in 2008 so is now rented out. It is owned 50% brother, 25% me, 25% wife, so wife gets 25% of rental income

Property 2 up north, bought by my wife and I as our home in 2010, but we relocated back down south this year, house currently empty, but intend to rent it out, owned 50/50 so wife will get 50% of rent

Property 3, my parents home we inherited when they died in 2012, now rented out, owned 50/25/25, so wife gets 25% of rental income

Property 4 down south, my parents rental property (granddads old place) we inherited in 2012, was rented out, but wife and I moved into this one when we moved out of property 2 and headed back south

All rentals are with agents

Wifes taxable rental income when it was 25% of properties 1,3&4 was £4.5k, will be roughly the same once it’s 25% of property 1&4 + 50% of property 2

So, where do you think we’d fit in in the decision makers guide?

We fit into the first example condition 2&3, but not 1 as we own 3 rental properties.

The second example, we own multiple properties and our long term intention is to keep them, but we haven’t joined together to buy properties to rent.

Thanks

Brighty





15743 If a person is letting properties that are not the home, the DM needs to consider if this is by way of a business

15744 A person who

1. has a single property that is not the home and

2. lets the property to tenants and

3. collects rents and does any repairs

is not conducting a business. The property is primarily an investment.

Example

Neil inherits a house from his parents. Neil lives elsewhere with his family.

After trying for six months to sell the inherited property without success, he decides to let the house on a nine month contract to four students. Neil collects the rent once a month and carries out occasional minor repairs.

The DM decides that Neil is not operating a business.

15745 A person who joins with others to buy properties so that they can be let as flats or offices could be said to be conducting a business. The

1. number of properties involved and

2. long term intentions of the person

are factors that need to be considered.

15746 If the DM decides that a person is conducting a business from renting out properties, the income, that is the rent, is a gross receipt of the business.

Example

Michael has a partnership with another person in a business. The business has been set up to buy land and property for sale and let to tenants. Michael and his partner own a garage with two flats above it and two terraced houses on the same street.

The flats and houses are all let to tenants and Michael collects the rent and does the repairs and maintenance.

The DM decides that Michael is a S/E earner and calculates Michael’s earnings. The rental income is regarded as part of the gross receipts.

pmlindyloo

On the application form for CA there is a section about income from property.

Did your wife not complete this part as she was already receiving the income at this time?

This part is to determine whether your wife would be classed as having the rental income as part of a business or whether it was an investment.

The distinction between the two can be complicated but my personal opinion is that your wife would have to be actively involved in the business - paperwork, maintaining the properties etc etc. to consider this a business and therefore earnings from 'work'.

However, not my decision to make!

If your wife has already informed the CA that she receives income from a property then it would seem that they have made the decision that it is an investment rather than a business.

If she hasn't informed them or now has more rental income than previously then she needs to inform them and let them make the decision.

Brighty

Thanks

She is not actively involved at all, nor is my brother, i do all the paperwork and arrange all maintenance. But that is a question that was never asked anyway.

We filled in all the details on the form at the time, they then sent us an additional form for each of the last 2 tax years where we detailed all the income and what her share was. But as the income of £4.5k is under the allowable £110 a week, we have no idea whether they counted it or not, as currently we are eligible either way, it's whether of not she can now earn another £110 a week on top via a part time job that we're unsure of.

Brighty

xylophone

But as the income of £4.5k is under the allowable £110 a week, we have no idea whether they counted it or not, as currently we are eligible either way, it's whether of not she can now earn another £110 a week on top via a part time job that we're unsure of.

You will only get the answer applicable to your wife's case by asking for an official ruling?