We are thinking about renting one of the rooms in our house to a student studying locally, to boost our income. Do we have to declare this to the taxman?
If the income you will receive is less than £4,250 per year, then the rent will be exempt from Income Tax and does not have to be declared to HM Revenue & Customs. This £4,250 limit not only includes the rent but also payments made for services i.e. cleaning, bill, meals etc. If the rent is more than £4,250 then the either the excess will be taxed or alternatively you can elect to be taxed under normal income less expense rules.
I am currently going through a divorce and as part of the settlement I have agreed to give two rental properties that I own to my wife. As the properties have gone up in value since I bought them some years ago, will I be liable for any tax.
Divorce rules can be quite complex for tax purposes, but as a rule of thumb if you pass the properties to your wife in the tax year (6 Apr – 5 Apr) that you separate, there will be no tax liability on you. This will apply as long as you have lived with your wife at some point in that year. If the transfer were to occur after the end of the tax year, then there will probably be some capital tax gains to pay, however you should seek further advice on this.
We are looking to retire but we want to rent out our farm to supplement our pension. What is the best way to achieve this?
Firstly you have to decide how much responsibility you want on the farm when you rent it out. Do you want to remain responsible for the upkeep, fertiliser, fencing etc. or do you just want to pass on the farm to a tenant or even have a shared farming agreement. There are different tax implications that you will need to consider with these options before you make a final decision. Clearly if the rent is to supplement your income then your advisor should be able to minimise the tax liability.
My partner and I have several rental properties and I also have a job which earns £42,000 a year. Given the low interest rates, our rental properties are generating a nice profit, which unfortunately I am paying higher rates of tax on. Is there a way I can give my partner a larger share of the rental income as she has a lower paid job?
As you are not married, HMRC will allow you to split the income from the properties in a different percentage to how you own them i.e. you could jointly own the properties but all of the income could be given to one of the partners. You should prepare a simple agreement between you and your partner and both of your should sign it stating your intention. It may also be beneficial to have all of the income (& expenses) paid into your partner’s own bank account.
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