CGT and Tax Credits

SpeedSouth

I can't find anything definitive on this. I currently get CTC, and will renew this year.  I also am on the deeds of a property to which I have never claimed any of the rent from a house purchased years ago with my parents.

The theory is that this year I will come off those deeds, so I imagine I will be liable to a CGT amount.  I can't find anywhere on the tax credit guidance if this counts as income for the purpose of that assessment.  Ultimately I will not pay the CGT value, as my parents will pay this but as far as HMRC are concerned I imagine I'd need to declare it.

Also if it does count as "other income", when the amount is registered so to speak.  From what I've read if I dispose of the property in this tax year 21/22, I'd complete a self assessment for this year, and the amount would be due in the next tax year 22/23, so affecting 22/23 tax credits?

calcotti

see
https://forums.moneysavingexpert.com/discussion/5894072/tax-credit-and-capital-gain/p1
and
https://forums.moneysavingexpert.com/discussion/6163228/tax-credits-and-capital-gains

I think the clue is in the name Capital Gain is not income and capital is ignored for Tax Credits. However like you I can't find anything definitive on gov.uk. However I do note that capital gains are not listed as somethng to be included on this page
https://www.gov.uk/guidance/tax-credits-working-out-income#other-income
which is fairly comprehensive.

SpeedSouth

Thank you, that looks like I need not worry then.

Jeremy535897

If you own half the property, you should receive half the net rent and half the proceeds, and pay tax appropriately (and within 60 days of the transfer for the tax on the transfer). Is there a mortgage? Why are you on the deeds? Do your parents declare all the net rent? If so, why? Depending on the amounts involved, you may have been obliged to complete tax returns for years gone by.

I agree that you should have no benefit issue with the capital gain, but if you should have been receiving rent, that is a different matter.

calcotti

Jeremy535897 said:

.. if you should have been receiving rent, that is a different matter.

Hadn't thought about but completely agree. If OP was entitled to half the rent but chose to forego it (effectively gifting it to his parents) that is something else for both tax and benefit purposes.

zagfles

calcotti said:

Jeremy535897 said:

.. if you should have been receiving rent, that is a different matter.

Hadn't thought about but completely agree. If OP was entitled to half the rent but chose to forego it (effectively gifting it to his parents) that is something else for both tax and benefit purposes.

Yes could be classed as notional income https://www.gov.uk/hmrc-internal-manuals/tax-credits-technical-manual/tctm04800

SpeedSouth

When I moved 14/15 years ago I couldn't afford the house so essentially my parents purchased it with a mortgage.  I was put on the deeds.

I moved out and bought a house 3 years later leaving it with my parents to rent out.  Currently there is no mortgage on it.

It was only 2 weeks ago whilst speaking to my parents about them wishing to sell the property, that I realised I was still on the deeds.  I had given it no thought for the last 10 years.

They have declared all the income for the duration.