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Thanks for your question
If th children are on the deeds, then they are the ones who will be treated as having a share of the rental income, unless than are under the age or majoriity in which case they CANNOT be put on the deeds anyway.
As for the rental income - I do not understand why your wife is to be put on the bank account -that will receive the rental income, as she has no involvement in this matter, it would be better that the granfather takes the rental income and then distributes it directly to the grandchaildren - or better still they be named on the accopunt too.
To keep your wife involved on this bann account, she will be treated as being in receipt of income which she does not legally have a right too AND cannot make any drawings (even for the children or it will be treated as half her income/third of he rincome)
So if its essental that she remins on the account, then no drawaingas and the the only tax liability will be, liable to tax on a share of any interest that is paid on the capital in the account - and its the interest (her share) to be declared on her self assessment tax return
Hi SamThere are 3 grandchildren and my father in law can't open a current account with all three names on it.
So it was suggested that my wifes name was on the account together with my father in law to manage the rental income on behalf of our children.
It would also help to smooth any problems that may arise as he gets older & less able to manage.
So to confirm what you have advised; if my wife was on the joint account she would not be able to distribute the rental income to our children without it being treated as her income or settle any house repairs etc?
And should we decide to go ahead with this account the only income she would have to declare on her tax return would be on half of any interest accrued on the joint account provided she did not make any drawings on this account?
Thanks for your response
Yes you are spot on - putting your wife on this account (although as an afterthought if she signed a declaration with her father than she has NIL interest in this account and that for the time he can, her father distributes the income to the children, and by the time he cannot manage this, then power of attorney could be sought) but she most certainly cannot settle bills or have any involvement with the income or outgoings of this account without then attracting the need to consider HMRC.
The other way around this is then your wife acts as manging agent and then she receives the rents and pays the bills etc and then distrbutes the net rents to her father and the children (and maybe takes a small wage for her trouble!)
Is that a feasible consideration?
Thanks for your response this is really helpful
Regarding your suggestion of my wife being the agent my father inlaw is planning to use a commercial letting agent and the money go to this new account we refer to then distribute it to our children.
Sounds like there is imited benefit of my wife being on this account only that she could step in time of need but without power of attorney she would still have the tax implications.
Many thanks once again