Mandated income

Mandated income

Didn't find your answer?

I have a client who has a rental property. He wants to provide his father in law with a lifetime "pension" of £900.00 using rental income. Can someone throw some more light on TSEM3763 and how does it work? Would he be required to turn the property into Buy to Let first? 

Is TSEM3763 Mandated Income the best way to approach this?

Many thanks.

Shams.

Replies (2)

Please login or register to join the discussion.

avatar
By cohen
11th Nov 2015 18:58

Hi

The rules that you refer to are for trusts and beneficiaries entitled to the income (eg life tenants). Ordinarily, income arising on the trust assets would be first taxed on the trustees, who would then pass the income on to the beneficiary, who would claim a credit for the tax that the trustees have already paid.

Exceptionally, where the income goes straight to the beneficiary without passing through the trustees hands, the beneficiary can declare the income as his own, and pay the tax due on this himself, without the trustees having to declare and tax it first.

Quite how that fits your scenario i'm not sure. If the client is going to settle the property on a life interest trust for his father's benefit, then there is CGT, stamp duty and IHT to think about.

 

Thanks (0)
avatar
By cparker87
11th Nov 2015 21:42

keep it simple
Does dad need the assurance of an enforceable life interest in possession? Really?

Is son a HRTP? Is dad a BRTP? If both BRTP can't son just give dad 900/ month? No strings then.

Thanks (0)