Carers allowance and 'business' income?

Brighty

Hi all

My wife currently receives carers allowance as our son receives DLA. Her only other income is rental income from a 25% share of some rental properties. She is wanting to start doing some sort of part time job.

We’ve just filled in and returned the form to tell them her ‘business’ earnings for tax year 2015-16.

Does anyone know what year they apply this income to?

What I mean is, if for example it showed her income was over the allowed £110 a week for last year, would they ask for all of last years CA back, or would they apply it to this year and stop payment for the whole of this year?

Alternatively, as is our case, her rental income is usually around £4600, so £90 a week, not far off the £110 limit, however for the year just gone, it was only £3100, so £60 a week, as we moved into one of the rental properties, so lost the rent.

We’re going to get our old house rented out later this year, so this year it will average around £75, and back to £90 after that.

Does that mean she can earn another £50 a week from working this year, or would it only be £35?

Hope that made sense

Thanks

Brighty

HappyMJ

Unearned income does not affect CA.

You really need to be speaking with the DWP regarding an important question like this.

Forums will provide you with opinion based on previous experience. It changes all the time so letting the DWP know you have profits from renting property and let them sort the figures out.

It's my opinion that she can have earnings from working up to £110 per week and her CA will not be affected. She can have as much unearned income that she can generate from her investments and it won't affect CA.

Brighty

HappyMJ wrote: »

Unearned income does not affect CA.

You really need to be speaking with the DWP regarding an important question like this.

Forums will provide you with opinion based on previous experience. It changes all the time so letting the DWP know you have profits from renting property and let them sort the figures out.

It's my opinion that she can have earnings from working up to £110 per week and her CA will not be affected. She can have as much unearned income that she can generate from her investments and it won't affect CA.

DWP know she has profits from rental income, that's why we had to fill in the business earnings form for the last tax year.

Unfortunately, they do count rental income, sometimes, which is why we get the form to fill in.

It's a fine line whether they count it as an investment and disregard it, or count it as income.
The decision makers guide gives 2 examples, owning 1 inherited house and renting it out, means investment, income disregarded, owning a share of multiple properties bought with the intention of renting them out, is a business, so income counts.
We're sat slap bang in between those 2 examples. She has a 25% share of 3 properties, 1 is our old main residence, 2 were inherited.

Brighty

HappyMJ

Brighty wrote: »

DWP know she has profits from rental income, that's why we had to fill in the business earnings form for the last tax year.

Unfortunately, they do count rental income, sometimes, which is why we get the form to fill in.

It's a fine line whether they count it as an investment and disregard it, or count it as income.
The decision makers guide gives 2 examples, owning 1 inherited house and renting it out, means investment, income disregarded, owning a share of multiple properties bought with the intention of renting them out, is a business, so income counts.
We're sat slap bang in between those 2 examples. She has a 25% share of 3 properties, 1 is our old main residence, 2 were inherited.

Brighty

There's an easy solution to that....get her to sell her shares in the excess properties so there is only the one property. She could sell her share to you for example. She could own just the one in her sole name and you own the others in your sole name so instead of having 25% of 3 she has 100% of 1.

Brighty

That would be a solution i suppose, but probably not a cheap one as solicitors etc would be required.
Properties were originally 50/50 me and my brother, but i transferred half of my halves to her for tax purposes

HappyMJ

Brighty wrote: »

That would be a solution i suppose, but probably not a cheap one as solicitors etc would be required.
Properties were originally 50/50 me and my brother, but i transferred half of my halves to her for tax purposes

You can transfer property without using solicitors.

https://www.gov.uk/registering-land-or-property-with-land-registry/transfer-ownership-of-your-property

tomtom256

So fraud all round then, just to get £62.10 a week, hardly worth the hassle!

Brighty

tomtom256 wrote: »

So fraud all round then, just to get £62.10 a week, hardly worth the hassle!

How is any of that fraud?

tomtom256

Hiding business assetts for tax evasion purposes and then potentially hiding them again in order to get carers allowance. Also known as hiding assetts/income for benefit purposes.

People moaned at politicians for doing the same type of thing!

Can't believe it had to be spelt out.

Brighty

tomtom256 wrote: »

Hiding business assetts for tax evasion purposes and then potentially hiding them again in order to get carers allowance. Also known as hiding assetts/income for benefit purposes.

People moaned at politicians for doing the same type of thing!

Can't believe it had to be spelt out.

No tomtom, firstly they're not business assets, they are privately owned rental properties. Secondly, transfer of property ownership between spouses in order to make best use of zero and 20% tax bands is perfectly legal, it is not tax evasion. Nothing is being 'hidden'

sheramber

HMRC definition of property letting being a business

Running a property business

You have to pay Class 2 National Insurance if your profits are over £5,965 a year and what you do counts as running a business, eg if all the following apply:

being a landlord is your main job
you rent out more than one property
you’re buying new properties to rent out

If your profits are under £5,965, you can make voluntary Class 2 National Insurance payments, eg to make sure you get the full State Pension.