Tax on property rental income... help?

[Slinky]

Folks,

(god, this one is slightly complicated in it's set up..)

Property 1 = Bungalow Owned by "Uncle P"
Property 2 = Flat owned by "Uncle T"

Uncle P = Deceased...

So, wife's grandmother, as a result of the profits from the estate of Uncle P has now purchased Uncle T's flat to allow Uncle T to move into Uncle P's Bungalow .. (are you keeping up at the back?)

So, now "Nanny" owns her own house and what was Uncle T's flat, the intention is to rent out Uncle T's flat (for a nominal fee to a family member at present)..

As an OAP (not sure whether this makes any difference or not, but may assist in the story telling) what does "Nanny" need to do in terms of Tax Returns (if any) or notification that there is a potential income of circa £3.6k pa.. ?

TIA,

slinky

[fade2grey]

I'd have thought that if it exceeds their tax free allowance, then a self assesment will be needed. Obviously you'll be deducting the costs of renting & maintaining the property so it might be close.

I'm sure someone like Eric will be along to give you the full sp though

[touching cloth]

Think you are overcomplicating things a bit, if I have it correct then Prop 1 is now owned and lived in by Uncle T which takes him out of the equation (as long as all the duties etc on the estate have been paid and finalised etc). That leaves your wife's gran as now having straightforward rental income on prop 2 - as mentioned above this can be dealt with using the property section of a self assessment form. Only thing to watch will be tax thresholds and pensions, if she has a pension I think earning money can suddenly make the pension taxable which can make the other earnings not beneficial - seem to remember my mother wittering on about deferring drawing her pension because she was still earning or something.

[Eric Mc]

Nanny will need to complete a Self Assessment tax returning showing ALL her income (including the rental income) for the tax year.