Charging parent rent

My Mum currently pays rent which is comfortably covered by her pensions. I am looking into buying a property with an annex which she will live in, we both love this idea of living so close and for her it brings more security than privately renting. Her assumption was that she would pay me what she currently pays in rent. She'd actually be slightly better off because she would not have separate council tax, water, electric etc and I would not be increasing the 'rent' each year. I can afford the property whether she pays 'rent' or not.

She's in her sixties; fit, active and fully independent and I would expect this to continue for many years. However, a couple of questions have just occurred to me:
1) Would her giving me money count as income which I should declare? 
2) At some point in the future if she had care needs would me accepting money from her look like financial abuse?

Thanks.
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  • la531983
    la531983 Posts: 1,672
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    Cant answer 1 but as for 2, nobody is expecting people to live rent free, as long as you have drawn up a proper rent agreement nobody will bat an eyelid.
  • Flugelhorn
    Flugelhorn Posts: 5,420
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    almost sounds like she would be a lodger and there is a tax allowance for that 
  • lisyloo
    lisyloo Posts: 29,537
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    edited 20 January at 1:58PM
    Do you mean she rents a seperate property from you or does she lodge at your house?
    rental income needs to be declared and taxes paid.
    theres a tax free allowance for lodgers.

    i don’t think there is any issue with deliberate deprivation unless she was paying you over the market rate in order to get free care but she’s in her 60s so I wouldn’t worry.
  • Brie
    Brie Posts: 9,305
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    Are you sure there wouldn't be council tax for an annex?  And tv license too I suspect?  

    My MiL lived with us (same house) for 5 years.  I calculated how much extra this cost us as, not being mobile, she needed us to do all her shopping, etc.  She like basic food like ready meals whereas my OH & I like more adventurous things so it was easy to ring fence what she was eating as opposed to us.  So I added up that amount, added in 1/3 of all the basic bills, utilities, water, CT and kept that list in case anyone ever asked.  The amount got adjusted when she reached the point that she needed the heat on 24/7 throughout the year.  That amount was paid by DD to our bank account so was very obvious on her bank statement.  In addition I had 3rd party authority on one of her bank accounts so I could pay any extra bills (catalogues, presents for relatives etc).  OH was joint on 2 other accounts so he could get money out for her when she wanted to go out somewhere and so he could pay for holidays she (& us) took.  

    When the local authority became involved due to her needing to move into a care home when her health declined drastically they had absolutely no problem with anything we had from her accounts.  They could see that everything was above board and for her benefit so none of it was an issue. 

    While in my mind I classed the money she paid us as "rent" there was no tenancy agreement of any sort.  I wonder if you did have her as a tenant whether you would then have all the legal hoops to jump through like any other landlord/lady.
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  • enthusiasticsaver
    enthusiasticsaver Posts: 15,324
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    You could just call it a contribution to bills rather than rent. If you draw up a rental agreement and charge rent then I think that would need to be declared. 

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  • njkmr
    njkmr Posts: 106
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    Maybe keep it simple. Your mother pays the Council tax whilst living with you. Maybe water rates as well depending on how much you both agree is a fair contribution. I wouldn't complicate things with rent agreement or anything like that.
    So in effect mother is just contributing to the bills whilst living there and nothing to declare or make things more complicated.
  • sheramber
    sheramber Posts: 18,640
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    If it is a self contained annexe with no  shared facilities or access to the main house it is a separate  dwelling for council tax. 
  • Mojisola
    Mojisola Posts: 35,544
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    Jami74 said:
    I am looking into buying a property with an annex which she will live in, we both love this idea of living so close and for her it brings more security than privately renting. 
    Her assumption was that she would pay me what she currently pays in rent.

    She's in her sixties; fit, active and fully independent and I would expect this to continue for many years. However, a couple of questions have just occurred to me:
    1) Would her giving me money count as income which I should declare? 
    2) At some point in the future if she had care needs would me accepting money from her look like financial abuse?
    If the annex is self-contained, you wouldn't be able to claim the tax-free lodger allowance for rent.

    Easiest all round to have her paying 'keep' rather than rent.  Work out what split of the household bills seems fair to you both.  Do a planned review every 6 months or annually or sooner if finances change drastically for either of you.  Put your agreement in writing so that you have something to show if your situation ever gets challenged.

    If your mother's capital keeps increasing and she wants to share it with you, think about her paying for a cleaner or a gardener so that you both benefit by having more time for the fun things in life.

    On point 2) - what you're doing is the opposite of financial abuse because your mother will be spending less while living with you than she would on her own.
  • sheramber
    sheramber Posts: 18,640
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    If she is living in the annexe will she be independent or will she be  sharing any expenses with you?

    Will she be buying her own food and cooking it in the annexe?

    Will utilities be independent  or shared with the main house?
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