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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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We have just bought our son a flat. The flat is gifted to

Customer Question

We have just bought our son a flat. The flat is gifted to him and in his name. For the next couple of years we plan to rent it out but understand it his in his name and therefore the rental will be seen as additional taxable income for him. How do we declare this tax and what can he claim against running costs for the flatand where and how does he do this ? Lastly, until he moves in my wife will be administering the property on his behalf, taking the rent and taking some income herself for doing this - are there any dos and dont's for this sort of arrangement?
Submitted: 3 months ago.
Category: Tax
Expert:  TonyTax replied 3 months ago.

Hi.

Your son will need to register for self-assessment using form SA1 here. He will be issued with a tax return after the end of the tax year in which he should disclose all his taxable income. Take a look here for information on the types of expenses that can be claimed.

If your wife manages the letting, then there is no reason why she should not be paid but she will need to pay tax on it if she has income in excess of the personal allowance. Even if your wife would have no tax liability, she should still register as being self-employed with HMRC and compete tax returns. There are some notes and links to relevant forms here. If a self-employed individual has only one client, HMRC can say that they are an employee of that client and make your son have to operate a PAYE scheme as the employer but I'd be surprised if that happened in this situation.

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

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