Carers allowance and 'business' income?

tomtom256

Brighty wrote: »

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'

Fair enough, but 3 rental properties must be a business, I have seen the HMRC post.

However for benefit purposes they generate a declarable income, as such transferring them to hide that income in order to claim benefit or to get more benefit is fraud.

I see how you ignored that part. Is benefit fraud more acceptable then tax evasion?

Brighty

tomtom256 wrote: »

Fair enough, but 3 rental properties must be a business, I have seen the HMRC post.

However for benefit purposes they generate a declarable income, as such transferring them to hide that income in order to claim benefit or to get more benefit is fraud.

I see how you ignored that part. Is benefit fraud more acceptable then tax evasion?

Why must 3 properties be a business? 1 is our old home, the other 2 inherited when my parents died, none were purchased with the intention of renting them out.

HMRC rules (15743-15745 here https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/509850/dmgch15.pdf) are that if you own 1 rental property, inherited, then the income from it will be ignored. If you start a business, buying multiple properties with the intent to rent them, that's a business and the income is counted. We sit firmly in the middle of those 2 scenarios, though i believe closer to the first.

The suggestion from HappyMJ was not to 'hide' the income, rather transfer some ownership, so instead of 25% of 3 properties, she could own 100% of 1 (or 75% of 1 to keep her capital the same), her rental income would remain unchanged, however she would then fit perfectly into example 1 of the guide and therefore all her rental income would be ignored.

To be honest, it's probably not something i'd do anyway, as my brother wouldn't be keen of messing about with what properties he owns. However, what i am going to do is write to them and ask if i can get some sort of official ruling from them, by explaining our situation and seeing where they think we fit in the 2 decision guide examples.

Brighty

pmlindyloo

Similar post to yours

https://www.carersuk.org/forum/support-and-advice/carer-and-disability-benefits/carers-allowance-entitlement-other-income-23225

Why not contact this organisation?

Contact details at bottom of page.

tomtom256

Brighty wrote: »

Why must 3 properties be a business? 1 is our old home, the other 2 inherited when my parents died, none were purchased with the intention of renting them out.

HMRC rules (15743-15745 here https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/509850/dmgch15.pdf) are that if you own 1 rental property, inherited, then the income from it will be ignored. If you start a business, buying multiple properties with the intent to rent them, that's a business and the income is counted. We sit firmly in the middle of those 2 scenarios, though i believe closer to the first.

The suggestion from HappyMJ was not to 'hide' the income, rather transfer some ownership, so instead of 25% of 3 properties, she could own 100% of 1 (or 75% of 1 to keep her capital the same), her rental income would remain unchanged, however she would then fit perfectly into example 1 of the guide and therefore all her rental income would be ignored.

To be honest, it's probably not something i'd do anyway, as my brother wouldn't be keen of messing about with what properties he owns. However, what i am going to do is write to them and ask if i can get some sort of official ruling from them, by explaining our situation and seeing where they think we fit in the 2 decision guide examples.

Brighty

The clue is in the thread title you gave the topic!

And to be fair it's not the tax side that is the issue it's the income for benefit purposes and essentially hiding it by transferring the property out of your wifes name in order to still be eligible for CA.

Brighty

Update on this

I wrote to the CA dept asking for an official ruling from them on where they think we fit in the 2 decision guide examples and therefore whether they counted the properties as a business, therefore counting income towards the £110 a week, or whether it was an investment and was disregarded.

I explained that it was a 25% share of 3 properties, 1 an old main residence and 2 inherited properties. I also included the relevant section of the 'decision makers guide'

Just received a phone call from them this morning to say it has been reviewed by a decision maker and that as the properties were not bought with the intention of renting, then they are an investment and income will be disregarded.

They will no longer ask for statement of rental income each year. Wife can now earn an additional £110 a week and still keep her CA. We just have to tell them if we buy another property.

Good result, especially as she'd already gone and got herself a job regardless and starts this weekend

Brighty