Giving buy to let incoming to student child

cdbe11

I'm struggling to get a simple straight answer to this. I have 3 buy to let  properties with a rental income of about 20k, I'm a basic rate taxpayer and currently pay tax on all the "profit", this is my only income. My son is going to university in September and our assessed parental contribution to his living expenses is just over 5k, but looking at accommodation costs etc it's likely to be more like 8k.

I'm trying to find out if it's possible to give a proportion of the rental income to our Son as he will be a non taxpayer for the foreseeable future.

The properties are jointly owned with my wife, a working basic rate taxpayer, and we have previously submitted a deed of trust to HMRC to share the income 99% to me and 1% to her so I could fully use my tax free allowance (this was a few years ago when the income was a fair bit less - barely more than my allowance).

Is it possible to do something? I don't want to do anything wrong, I don't want to be giving him any properties, getting into CGT issues (I'm quite happy to pay this when we sell to retire in the future etc) or take away his first time buyer status.

I just think it will make use of his unused tax free allowance and help us fund his course.

As said, I'm struggling to find much out - most seems to be warnings when people do it as a dodge and the owner is keeping the money or getting it passed back to them - this is not the case, the rent would go directly into his bank account, and then probably to the student union bar!

Thanks.

Brie

I don't see how this can be son's income unless you are assigning him as the property manager perhaps?  Sounds more like a gift which means you would still be taxed as you still have the income and he wouldn't as he doesn't have any income.  

Jeremy535897

You cannot allocate rental income to someone who owns no part of the underlying property. It would be a settlement if you could, and so taxable on you anyway.
If son did something in the management of the property you could pay a modest wage at minimum wage level for the hours worked, but I guess this is unrealistic.
Remember that your son's income will also have an impact on his funding, and you could make matters worse.

BoGoF

You will struggle to find an answer on something that can't be done. If you were self-employed and passed your income direct to your son do you think it would be deemed his income?

What makes you think property income that he has no interest in would be any different?

Grumpy_chap

cdbe11 said:

I'm trying to find out if it's possible to give a proportion of the rental income to our Son 

Yes, like any other income, you can take this income, pay the requisite taxes and make any gift you wish to your son from the post-tax income.  There will be no tax liability arising for your son on receipt of the gift.

Albermarle

 but looking at accommodation costs etc it's likely to be more like 8k.

That would be towards the top end. Although if they stayed in a new modern ( posh) halls of residence, and/or in an expensive part of the country, it might get up to that level. Although normally £5K is not enough unless they keep spending very low, and/or get a job/use savings.

badmemory

A possible suggestion for his second & third year.  A property where he is at uni & has now got steady friends after the first year.  A house share that will pay the mortgage via rent from friends.  They don't even need to know that his parents are the owner

silvercar

Jeremy535897 said:

You cannot allocate rental income to someone who owns no part of the underlying property. It would be a settlement if you could, and so taxable on you anyway.
If son did something in the management of the property you could pay a modest wage at minimum wage level for the hours worked, but I guess this is unrealistic.
Remember that your son's income will also have an impact on his funding, and you could make matters worse.

Students own income isn’t assessed for student loan purposes.

You could definitely pay him for a few hours work here and there to help in the management of the property, but it would have to be realistic. I did similar, but the properties were owned by my limited company so there was a clear line between my personal income and that of the company. A few hours of filing/ paper shredding etc. 

Jeremy535897

Investment income can be taken into account, which is what I was thinking about.