Paying Tax and Documentation

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    Paying Tax and Documentation

    My query is in two parts

    1. I own a property in my personal name. I purchased this to give a family member some passive income.

    Am i right in saying that as the rent does not come to me, i do not need to notify hmrc of additional rental income? And i do not need to fill in a tax return?


    2. After the above purchase, I purchased another property via a limited company (set up last year)

    Following a refurb, I only started renting it out a few weeks ago

    However, I am confused on how i will pay tax (eg on rental income)

    Do i need to notify anyone? Which forms do i need to fill out and when?

    #2
    The Director of the Ltd Company has to file annual returns to Companies House and to HMRC..

    Visit Companies House website, use your company number to find company listing and check due date for filing tax returns . Can be fined if you fail to comply.

    Comment


      #3
      If you receive no income from the property you own, you don't have to pay income tax on it, no.
      You may have to pay CGT when you sell it, if there is any significant increase in value.
      When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
      Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

      Comment


        #4
        Originally posted by jpkeates View Post
        If you receive no income from the property you own, you don't have to pay income tax on it, no.
        You may have to pay CGT when you sell it, if there is any significant increase in value.
        I don't think you can just divert the income through another family member's account, that could be tax evasion.

        Comment


          #5
          Originally posted by Section20z View Post

          I don't think you can just divert the income through another family member's account, that could be tax evasion.
          Agree with that. If they were a co-owner OP could agree to split the rent and expenses in some way. But not otherwise.

          Comment


            #6
            Originally posted by Section20z View Post
            I don't think you can just divert the income through another family member's account, that could be tax evasion.
            It could be, it depends where the money ends up.
            Tax follows beneficial ownership, so if the relative is the landlord and receives all the rent and keeps it, the owner of the property isn't involved in the income.

            If the income received benefits the owner financially in some way, it is indirect income, which is still income.
            When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
            Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

            Comment


              #7
              You should ensure that the family member is reporting the income; otherwise you could end up embroiled in a HMRC enquiry. HMRC have access to a lot of data and do open enquiries into those who own more than one property where it is believed that a property is let out. There can be issues with diverting income to other family members. Anti avoidance rules can apply although this is generally more applicable where a minor child is involved or in husband/wife or civil partnership situations. I do not think it will directly apply to you based on the information provided although it is recommended that you properly document any arrangement.

              Your company will pay tax on its rental profits and you will pay tax on any inocme you draw from the company. You should seek professional tax and accounting advice. You are welcome to contact me if you need anything further.

              Comment

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