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21 July 2015
The tax implications of an informal property letting to a relative.
My client and her brother inherited a house from their parents which they now own jointly. The house is let I believe on an informal tenancy to my client’s daughter (her brother’s niece) who lives there with her partner.
The property is capable of earning a rental of around £700 a month but the daughter and partner are paying substantially below this. The tax rules appear to suggest that property rentals to family members at below market rental rates are not liable to income tax and that approach has been taken over the past three years. However the daughter also “helps out” in her mother’s business. Is it correct to treat this income as non-reportable for income tax?
I have now started to wonder whether there is an element of benefit-in-kind in that the...
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