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taxadvisor.uk, Chartered Certified Accountant
Category: Tax
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We own a bungalow in my wife's name that her mother and

Resolved Question:

Hi we own a bungalow in my wife's name that her mother and father are now living in as they wanted to sell their house, my question is do we have to declare any money given. We do not have a rental agreement.
Submitted: 11 months ago.
Category: Tax
Expert:  taxadvisor.uk replied 11 months ago.

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.

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

Customer: replied 11 months ago.
what would you class as living expenses, if any money given was in the form of a monthly payment but not specifically rent, how is this classed. The reason I ask is I believe money can be given as a gift but is not required to be declared, so is this any different?
Expert:  taxadvisor.uk replied 11 months ago.

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

http://www.which.co.uk/money/tax/guides/inheritance-tax-explained/inheritance-tax-planning-and-tax-free-gifts/

I hope this is helpful and answers your question.

Expert:  taxadvisor.uk replied 11 months ago.

Hi there

Just checking if you have any question or need any clarifcation on my responses.

Many thanks

Customer: replied 11 months ago.
Hi, so just to clarify, we bought the bungalow for my late father to live in, but before he could move in he died. Rather than sell again right away we decided to rent out, we were about to get a tennant when my wife's parents said they would like to move in, initially we declared the payment as income as we had many things to deal with and did not have chance to look into it properly. So from what you say as long as we do not class it as rent we are OK up to £6000.
Expert:  taxadvisor.uk replied 11 months ago.

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.

I hope this is helpful and answers your question.

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Expert:  taxadvisor.uk replied 11 months ago.

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