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My father and step mother are both in separate care homes.

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They jointly own a house. My...
My father and step mother are both in separate care homes. They jointly own a house.
My father has a state and occupational pension both of which are considered as sole his income by the local authority. My step mother has a small state pension and does not pay tax.The house is to be rented with an income of just under £18k p.a. all, less expenses of which will be paid to the local authority for their care.What is the best way to apply their income to tax. Will one or both need to self assess?Bob Chard
Submitted: 8 months ago.Category: UK Tax
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11/15/2017
UK Tax Professional: taxadvisor.uk, Chartered Certified Accountant replied 8 months ago
taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: UK Tax
Satisfied Customers: 5,181
Experience: FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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Hello and welcome to JustAnswer. I am here to help you. I am reviewing your question and will respond to you shortly.
Many thanks

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UK Tax Professional: taxadvisor.uk, Chartered Certified Accountant replied 8 months ago

Thank you for your question.

As the rental income is over £10k before allowable expenses and the property is jointly owned, they would both have to register for self assessment and file a tax return.

More information on this and how to register for self assessment can be found here

https://www.gov.uk/renting-out-a-property/paying-tax

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

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Customer reply replied 8 months ago
I thought so. But could only one register for self assessment i.e. take the whole income and then gift half the net amount to the other? The idea of having to do two self assessments on their behalf is painful if not necessary?Bob Chard
UK Tax Professional: taxadvisor.uk, Chartered Certified Accountant replied 8 months ago

Thank you for your reply.

If the property is jointly owned then HMRC treat the income and gain from the property arising in equal share. You can split the income/gain in unequal share by completing Form 17 declaration of beneficial interests in joint property and income. This action is not retrospective.

More information on this can be found here

https://www.gov.uk/government/publications/income-tax-declaration-of-beneficial-interests-in-joint-property-and-income-17

I hope this is helpful and answers your question.

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UK Tax Professional: taxadvisor.uk, Chartered Certified Accountant replied 8 months ago

Hi Bob

Just checking to see if you need further clarification/information or have I answered your question.

Many thanks

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Customer reply replied 8 months ago
Hi. I have not been able to research and so can you explain your reference to £10,000? Their share in the value of the rental is equal and if HMRC treat them as separate individuals with separate self assessments then their gross income from the rental will be £9k (probably slightly less). What s the £10k limit and how does it apply - no doubt it will.Bob
UK Tax Professional: taxadvisor.uk, Chartered Certified Accountant replied 8 months ago

Thank you for your reply.

If you look at the link here ...

https://www.gov.uk/renting-out-a-property/paying-tax

6. Paying tax and National insurance

Scroll to Property you personally own ... it states

You must contct HMRC if your income from property rental is less than £2,500 a year.

But you must report it on a Self Assessment tax return if it’s:

- £2,500 to £9,999 after allowable expenses

= £10,000 or more before allowable expenses

If you don’t usually send a tax return, you need to register by 5 October following the tax year you had rental income.

I hope this is helpful and answers your question.

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