Buy To Let Question Buy To Let Question - Page 2
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  1. #11

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    Quote Originally Posted by anim View Post
    What the OP wants is called life rent. Look it up.
    This is also the only legal way not to pay SDLT on second+ home.
    Isn't that Scotland only?
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  2. #12

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    It must be. Never heard of it and I thought I had heard of the lot. Goes to show difference between England and Scotland despite all being part of Uk hmrc!!

  3. #13

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    Quote Originally Posted by eek View Post
    Isn't that Scotland only?
    I dont know. Likewise I dont know where the OP's property is. Just saying like.

  4. #14

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    Now if this was for your wife/partner, then you could use a specific part of s836 Income Tax Act (ITA) 2007 which states that income from property jointly owned by spouses/civil partners who are living together to be the equal income of those persons i.e. 50/50 each - and that this can be overridden if a declaration is made under s837 ITA 2007 by way of HMRC Form 17.

    I doubt this would work for a parent, but it's worth running by a Property Accountant. I won't recommend my accountant in this case because it's quite specialised and I don't want to ruin his day.

    Otherwise, set your mum up with a Management Contract whereby she is responsible for managing the property and for collecting the rent. She can collect the monthly rent take a 20% fee and pass on the rest to you.

    If 20% isn't enough then you might be stretching the limits of what you can do without bordering on tax avoision (yes I said the made-up word that exists in HMRC's heads ). You could sell her 50% of the house I suppose, but that will entail CGT and SLDT and then Inheritance Tax planning.

  5. #15

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    Quote Originally Posted by ladymuck View Post
    You could employ her? If she's over state retirement age there would be no NI to pay and just a bit of PAYE on the salary.

    You then reduce what you take from your company by £1500 a month as you'll be keeping it.

    Obviously, do the sums and make sure it adds up.
    .....
    Thanks for this Ladymuck 🙏

  6. #16

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    Quote Originally Posted by GhostofTarbera View Post
    Does you Mum spend this £1500 or perhaps give you back £1K in cash ?


    Sent from my iPhone using Contractor UK Forum
    I think are you asking if this is illegal tax evasion? No - I give my Mum all the income from the property each month. I have been paying tax on it and then transferring her the balance for a few years now and a friend said there might be another way of doing it that would enable me to give her more each month. I understand others might be wanting to set up an structure purely to pay less tax themelseves that is illegal- but thats not my situation.

  7. #17

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    Quote Originally Posted by NowPermOutsideUK View Post
    A fascinating question which I think a lot of people have wondered myself included

    Basically the op would like to use someone as a tax mule who is not his spouse

    Would be interested to know if anyone has actually done this and gone through a hmrc investigation

    I’m guessing a back to back transaction where he rents it to his family who then sublets it at at a higher price might work together whether the family member can be an agent and take a slice.

    Definitely interested in other peoples view
    ......

    Thanks very much for this idea -its a good one although not sure it can work here. My Mum is mentally ill so cant be responsible for decisions/actions relating to the property. ie i manage it receive the income and pay the bills, i just give her the net income.

    In the subletting structure you propose I assume it would only work if she could receive the income from the tenants/agents?

  8. #18

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    Quote Originally Posted by anim View Post
    What the OP wants is called life rent. Look it up.
    This is also the only legal way not to pay SDLT on second+ home.
    ...
    Thank you very much for the idea I hadn't heard of this term, much appreciated. I have read about in on a few websites. As the property has a mortgage I dont believe it will work unfortunately

    https://grigor-youngdotco.uk/propert...ions-answered/

  9. #19

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    Quote Originally Posted by ChimpMaster View Post
    Now if this was for your wife/partner, then you could use a specific part of s836 Income Tax Act (ITA) 2007 which states that income from property jointly owned by spouses/civil partners who are living together to be the equal income of those persons i.e. 50/50 each - and that this can be overridden if a declaration is made under s837 ITA 2007 by way of HMRC Form 17.

    I doubt this would work for a parent, but it's worth running by a Property Accountant. I won't recommend my accountant in this case because it's quite specialised and I don't want to ruin his day.

    Otherwise, set your mum up with a Management Contract whereby she is responsible for managing the property and for collecting the rent. She can collect the monthly rent take a 20% fee and pass on the rest to you.

    If 20% isn't enough then you might be stretching the limits of what you can do without bordering on tax avoision (yes I said the made-up word that exists in HMRC's heads ). You could sell her 50% of the house I suppose, but that will entail CGT and SLDT and then Inheritance Tax planning.
    ....
    Thank you very much for the response. Yes unfortunately it needs to be more like 70%🙏 - and it doesnt sound like from anyone else's ideas this is possible

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