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Non Dependant – Calculation of property they own

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  • January 8, 2007 at 5:44 pm #23394
    Anonymous
    Guest

    Hi

    I have a case where a non-dep owns a flat which they rent out. Do we take into consideration this as an income minus mortgage, agents fees etc? Or should I be doing a calculation on the interest of the capital asset? Unsure how this would be calculated though.

    Thanks

    January 8, 2007 at 8:48 pm #12331
    Kevin D
    Participant

    Capital for non-deps is not taken into account (unless you decide HBR 26 applies). There is also no calculation of tariff income.

    All that counts is ACTUAL (gross) income – including any rental income and any ACTUAL interest received on any capital.

    Regards

    January 9, 2007 at 9:27 am #12332
    Anonymous
    Guest

    The only other thing worth pointing out here, and I’m sure you are perfectly well aware of this but for the avoidance of doubt: the income received from the property is only relevant if this non-dep is working for 16+ hours a week. If s/he isn’t, it’s a bog-standard £7.40 even if the rent income is £1000 a week.

    January 9, 2007 at 2:49 pm #12333
    Mikeb2
    Participant

    Surely if he gets income in the form of rent from his flat he is self employed 😕

    January 9, 2007 at 3:04 pm #12334
    Bobkirkpatrick
    Participant

    So if you owned a flat that you were letting out to someone, you”d be working on this for at least 16 hours a week?

    January 9, 2007 at 3:09 pm #12335
    Mikeb2
    Participant

    I would if I got a good tax break on it… 😉

    In reality, no, probably not. 😳

    January 9, 2007 at 3:12 pm #12336
    Kevin D
    Participant

    Barring some remarkable and exceptional circumstances, I’d agree with the sentiment expressed by Bob K.

    There is a CD (more than one?) where it was comprehensively found that a clmt renting out a single property was not self-employed in such a situation. The clmt had argued that he WAS self-employed and, in turn, the property was a business asset (hence not capital for benefit purposes). In addition, a national insurance exemption certificate was found to be NOT conclusive of the self-employed status of the clmt.

    The CD in question is [b:3494195f87]R(FC) 02/92 (aka CFC/0015/1990)[/b:3494195f87]. I doubt there would be any material difference in findings for HB/CTB purposes etc.

    Just wondering: How many properties does it need to be before you are self-employed?

    January 9, 2007 at 3:20 pm #12337
    david kearney
    Participant

    We had a claim where customer and partner owned two properties and inland revenue happily accepted they were self employed, both working 16 hours (maintaining the properties and collecting rent!), and entitled to tax credits. We didn’t pay but those tenants must have been wonderfully well cared for

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