Thank you for your question..
If the parents are making a contribution towards the running costs of the bungalow, then you don't have to declare it.
If on the otherhand, they are paying a rent, then this should be declared.
As you don't have a rental agreement in place, you could ask them to make a payment that goes towards the living expenses and not explicitly rent.
I hope this is helpful and answers your question.
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Thank you for your reply..
Gifts are fine...you should bear in mind, the total amount gifted should be below £3000 x 2 (to cover both parents) as this amount falls within the annual figure that is exempt.
Gifts made as part of normal expenditure are also exempt.
A monthly payment not specifically rent but to cover light and heat, contribution towards general maintenance and upkeep etc would be out of scope for income tax purposes.
More information on these can be found here
Just checking if you have any question or need any clarifcation on my responses.
Thank you for your reply.
If your wife's parents have not gifted any money in the current tax year, they could gift it to their daughter (your wife) £3,000 each and it would be treated as an exempt gift for IHT purposes.
Recipient of a gift receives it free of tax as there is no tax on gifts. Make sure it does not say it is in lieu of rent as gifts are unconditional.
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