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28/05/2009, 10:36 Llantony Joined on 23/08/2004 South West France Posts 356 Tax on UK rental We are going to rent our UK house to our son at well below market rate.  I gather we will have to pay UK tax on this rent - but will this be at the normal UK income tax rate?  Not even sure how much that is - around 20%?  Seems an awful lot!  This is an informal arrangement and I haven't yet found an insurance company that will insure our house when we are not living in it.  The only way seems to be to become an official landlord with contract etc. and get landlord's insurance, seems a bit OTT for letting my son live there.    Report

28/05/2009, 11:01 PeterG Joined on 15/11/2005 Lancs/Yorks border - 79 Posts 447 Re: Tax on UK rental Why doesn't your son insure the house and deduct the monthy premium form his rent. A wasted day is one where you have not laughed.    Report

28/05/2009, 11:03 Braco Joined on 29/11/2008 34 Posts 115 Re: Tax on UK rental Money from children – a concept I am having difficulty conceptualising.   On a serious note – child pays all expenses plus makes gift to deserving parent = no rental profit therefore no tax liability.      Report

29/05/2009, 9:59 Llantony Joined on 23/08/2004 South West France Posts 356 Re: Tax on UK rental As my son doesn't own the house, I thought he could not insure it.  I asked a couple of insurance companies if I could insure the house nd they did not suggest that solution.  If I do find an insurer, my son could pay which would reduce the rent - which I should declare to UK tax people.  If I could find a way for him to pay our complementaire health insurance that would reduce the rent to very little!  (Presumably health insurance is not tax deductable in France?).  We are getting estimates for a complementaire at the moment.    Report

29/05/2009, 10:30 Chancer Joined on 16/07/2006 Picardie, Sussex Posts 4,082 Re: Tax on UK rental Llantony. I too had problems insuring a house in the UK which is rented in a similar way and gives me a very small income, I renewed my insurance yesterday with Intasure following a recommendation from someone on this forum, I dont know who they were but thankyou to them I had had a landlords type policy which was not particularly relevant to my circumstances and somewhat restrictive, the policy with Intasure is exactly what I needed and I think will suit you, it is actually a holiday home policy on the basis that you live in France and it is effectively your second home. The cover extends to you, your family and short or long term rentals and best of all it was a saving of 40% for me. There is another option you could consider which I had to do initially when I had a good friend housesitting for me, I had the problem that my then insurance company refused to cover me as I would not be there (I was travelling at the time) and would not allow the insurance in my friends name as he didnt own the house, I was in a catch 22 situation as I then had to declare to other insurers that I had been refused cover and they in turn would not cover me, I had less than 2 days to do something before leaving to backpack around the world. I had a stroke of inspiration and decided to (falsely) pay the minority card, I again spoke to the highest person I could with my insurers (red telephone on wheels) once again they repeated that they could/would not help me, so I told them that myself and my friend (except that I fibbed and referred to him as "my partner")  considered their decision homophobic, there was an embarrassed silence and I was put on hold while they conferred and then given the good news that the policy would be amended to show us as joint policy holders, you could not make it up I think in your circumstances you may well be able to take out a standard policy with your son as joint policyholder. Sometimes you have to think outside of the box, I hope that this has been helpfull.    Report

29/05/2009, 10:52 suein56 Joined on 23/08/2004 Southern Morbihan (56) Posts 2,009 Re: Tax on UK rental  J.R gone native wrote: I think in your circumstances you may well be able to take out a standard policy with your son as joint policyholder. I think this is what some friends of ours have done with a home they bought for their son whilst he studied at uni in the UK. usually the whole family is resident in France. Sue Computing - it's another world    Report

29/05/2009, 11:05 Gluestick Joined on 22/03/2006 UK and Nord Pas de Calais Posts 2,905 Re: Tax on UK rental Your son could not insure the property as he has no "Insurable Interest". The only insurable interest he might have would be for the cost of tenant's liabilities which are normally and usually limited to redecorations in the case of fire, flood etc. Personally, I would tread very carefully here! If your son is in full time residence then he is indeed a tenant and any incorrect declaration to an insurance underwriter might cause them to repudiate a claim inthe case of significant loss! Technically and legally, you are indeed a landlord: and your son legally a tenant. Thus you, not he, is responsible for the annual gas safety check and the issuance of a Landlord's Gas Safety Certificate: and annual safety testing and certification of any electrical equipment such as washers, dishwashers, freezers, fridges and etc.  There is also a commercial landlord's register coming into force shortly: and ALL commercial (i.e. non social) landlords must register. Allowing anyone to occupy property without a written codified and precedent lease is always a very dangerous thing to do: son or not. Personally I would transact this on the basis of An Assured Six Month Shorthold Lease, which rolled over each six months. Any Income Tax would of course be offset, if appropiate, against your French income tax as you are, I seem to recall, now Fiscally Resident in France. Tax would be due under the Self Assessment Regime (Income from land and property) and arise on the net profit (i.e. Gross Rent less qualified expenditure). One further complication is that now, you would be classed as a "Foreign Landlord". http://www.creaseystaxconsulting.co.uk/docs/RT98.pdf   "Yes, but that apart, Mrs Lincoln, did you enjoy the play?" Gluestick    Report

29/05/2009, 12:31 Chancer Joined on 16/07/2006 Picardie, Sussex Posts 4,082 Re: Tax on UK rental As if there wasnt sufficient confusion between residence (and its many different measures and interpretations) and domicile now we have "usual place of abode" to throw into the mix.    Report

29/05/2009, 15:21 Gluestick Joined on 22/03/2006 UK and Nord Pas de Calais Posts 2,905 Re: Tax on UK rental As an accountant in practice where part of the practice focuses on Tax Planning, JR, believe me, it is all a minefield of confusion! Since NuLab -tried - to merge Revenue and Customs and keep coming up with changes and amendments to just about everything in sight, it becomes worse, far worse, by the day. BTW: I loved your ploy about Homophobic Discrimination! I'm going to nick that one and use myself!   "Yes, but that apart, Mrs Lincoln, did you enjoy the play?" Gluestick    Report

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