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TonyTax
TonyTax, Tax Consultant
Category: Tax
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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Just been asked to complete tax return but not sure how to

Resolved Question:

hi, just been asked to complete tax return but not sure how to go forward with my situation.
I receive carers allowance for my son and would give them updates on my rental income.
my son as special needs and has been unable to continue in education or hold down any type of work.
i have been getting rental income (£1000) since november 2016 and wish to declare it in his name as his income ( he now 18 years old and doesn't receive any other work related benefit) and either make him a sole trader or a partnership but have not got around to setting this up or getting the income paid directly into his account. My son does not claim tax credit. Does / can he also/ need to claim tax credit to be in the system? I feel like he is a bit non existent at the moment?
The idea is to be able to still claim carers allowance but be as independent as possible and not claim housing or any other benefit between us.
I have a daughter who is still in education. I get tax credit for her.
Submitted: 10 months ago.
Category: Tax
Expert:  TonyTax replied 10 months ago.

Hi.

The bank account that the rental income is paid into is not relevant to determining who pays the tax on it. In order to allocate the rental income to your son either partially or completely, he would need to have an ownership interest in the property as you will read here. He would need to be registered for self-assessment by completing a form SA1 and sending it to HMRC. There is no need for him to be a sole trader. He doesn't need to be claiming tax credits.

The problem with making a gift of a share in the property to your son is the potental liability to Capital Gains Tax. Such a gift would be deemed to have been made at the opan market value. However, if you gifted a very small share, then CGT may not be an issue. The gift would also be a potentially exempt transfer for Inheritance Tax purposes which would remain in yiour estate for sevn years after it is made.

I hope this helps but let me know if you have any further questions.

TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15838
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
TonyTax and other Tax Specialists are ready to help you
Customer: replied 10 months ago.
Hi Tony can you help me sort my financials out?
I'm not trading yet but I'm registered for VAT and need to submit my accounts for "Madam Loves Brandvertising Ltd" 30th of June.
And will you help me and advise me further on the matter we discussed?

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