Universal credit and owning a second property

calcotti

staceyfaye said: It has always been counted under "other income" and we have paid tax on it accordingly.  I think the best solution would be for the time being, stop charging the rent - and then we won't need to declare the property as capital because MIL is of pension claiming age.  Then re-asses the situation when one of us finally get another job.

You will need to declare the second home regardless. The DWP will then decide whether or not it can be disregarded. Not declaring it would be fraud.

i am still of the opinion that it falls to be disregarded as capital. Paragraphs 1 and 2 of Schedule 10 quoted by huckster are different categories of property and can, as I read it, both apply at the same time.

Contrary to my earlier post the rental income will possibly be captured by the ‘other taxable income’ clause for income. Nonetheless I don’t think you are obliged to charge a rent and therefore there can’t be an obligation for the rent to be set at a commercial level.

huckster

If the OP bought the property for investment purposes and not as a family home, then I would question any disregard applying.
The fact that they are charging rent is further proof it is an investment and not extended family home.  Therefore it does not matter that someone of State Pension credit is living at the property.
Just my take on it.

calcotti

huckster said:

If the OP bought the property for investment purposes and not as a family home, then I would question any disregard applying.
The fact that they are charging rent is further proof it is an investment and not extended family home.  Therefore it does not matter that someone of State Pension credit is living at the property.
Just my take on it.

I can’t see that the law says anything about how the property was acquired or what purpose it was acquired for, just that it is disregarded if occupied by someone who fits the specified description.
see also http://data.parliament.uk/DepositedPapers/Files/DEP2019-0980/19._Capital_disregards_v15.0.pdf which presents the information in a slightly different way.