Property income

Receiving someone else's rent ?

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I have a new client who receives rental income into her bank account but have found out her father owns the property, surely this should be taxed in his name and he is gifting his daughter the money? Apparently they have done this for years and don't see a problem with it.

Replies (6)

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By johngroganjga
25th May 2018 17:18

You are quite right about whose income it is, and who should pay tax on it. But you don’t tell us whose income it is being treated as being for tax purposes. Would you care to elaborate?

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By SBB
25th May 2018 17:24

Sorry, the daughter has been declaring the income on her tax return as she receives it! Thanks for your reply!

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By Montrose
25th May 2018 18:10

It might be argued in favour of what has been done that father has given daughter a rent free licence to occupy-but this would be difficult to support if father receives the income back from daughter.
Is the property insured, and in whose name? Who bears the cost of insurance? Are insurers advised of factual situation?

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Replying to Montrose:
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By Accountant A
25th May 2018 22:01

Montrose wrote:

It might be argued in favour of what has been done that father has given daughter a rent free licence to occupy-

Completely academic, I suspect, but would that not have been a (part) disposal (deemed at MV) for CGT purposes? Otherwise it seems (assuming it is possible and was documented) to be an easy way to shunt income around.

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By SXGuy
29th May 2018 14:27

Hang on. Is the daughter receiving the rent directly from the tennant or is the father paying it to the daughter?

Surely if the daughter receives the rent with the father having no interaction then it would be correct to tax her since she receives it?

I don't see why it should matter who owns the property unless something more is happening I'm unaware of.

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Red Leader
By Red Leader
29th May 2018 17:08

PIM1020

Any person or body of persons carries on a rental business if:

they own or have an interest in land or property in the UK; and

they enter into transactions that produce rents or other receipts liable to IT or CT from that land or property.

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