To think we cannot accept rent via DC's bank account!?

[coucoululu]

DH and I have a flat that we would like to rent out. We understand rent will be a second income and so will get taxed as such.

DH is saying if we were to open a bank account for our 10 month old, it would be his income and will only get taxed after £12,500.

I highly doubt this is ok. I have had a Google and am sure it's not allowed.

The money ultimately would be for DC and maintenance of the property but even so.

Advice greatly appreciated. X

Sounds like tax evasion to me.

This is reminiscent of Harry Redknapp having a bank account for his dog.

No, not allowed.

Just pay the tax you owe

Does he own the flat then? I am no kind of expert, so don't believe everything I say at all, but wouldn't you have to give him the flat for this to be credible, and then if he wants to sell it at 18 to spend the cash on girls and fast cars he could blah blah.

And you probably can't just give him the flat without stamp duty or other hassle and cost.

Of course that won't work. That would be a pretty stupid loophole to leave.
Pay your tax.

No. If the income is yours, you get taxed even if it goes into someone else’s bank account.

Even if you gave your child the house (which I don’t think would be a good idea, to be clear) then parents are taxed on income received by children if the asset that produces the income was given to the child by the parent.

Your son is a minor, you own the property, you would be fully taxable on the income. If you didn’t declare it, it would be straight up tax evasion.

Why do people come up with these stupid ideas and think aha HMRC would never think of this. It makes you look a bit silly.

You would be committing a pretty serious crime.

Putting the income into a bank account in his name doesn't mean you're not getting the income in the first place, it's still taxable on you in the normal way as the property owners. Plus if the bank account earns bank interest over £100 per year that would also be taxable on you as his parent.

Under 18s can't open property. And a 10 month old definitely can't enter into a contract with a tenant.

Accountant and (reluctant - it's a long story) landlord here - no, it's tax evasion.

Above was my first thought.

My second is that I doubt under 16s can register for self assessment to pay tax on rental income as you need a national insurance number to get a Unique Taxpayer Refernce number.

Also, pay your taxes.

Go to an accountant. They know all the best ways.

No, you can't do that.

You need to keep full and accurate records of all the legitimate expenses involved in letting out the property. They will be allowable against the income and your tax will be reduced in a perfectly legal way. You might want to seek the advice of an accountant to help with this, especially if you've no experience of doing tax returns.

You would have to receive the money into your account, then transfer the equivalent (ir however much you want) into your child’s account if you want to out the money away for him.

honestly this, we rent out a small flat and the tax is fine it would never occur to us t o tax evade/dodge its just dishonest.

Under 16s can be registered for self assessment but yeah that’s the least of the issues here.

Or - and hear me out - you could just pay the tax you rightfully would owe.

Sorry minors can't own property. You could move the flat into trust for him but that would be a property transaction and incur the costs like stamp duty etc.
If he doesn't own the property then he can't collect rent on it

Are you me?!

But this is right. The rules mean income diverted to kids is taxed on the parents anyway, so not declaring it would be tax evasion.

Income of children are taxed on the parent

Also if you own the property it’s you who will be taxed on the income

So no, you can’t avoid tax

Parents are taxed on children’s income in certain circumstances. If the child received trust income from a trust settled by a grandparent for example the child would be liable for the tax (although trust tax credits etc would come into play). Children can and do pay tax, although all sorted and signed off my parents/guardians/trustees etc.

If your DS does not own the flat then it’s tax evasion getting the rent paid into an account in his name. It will be your name and your DH’s names on the lease, it will be you both paying management company bills, etc.

HMRC have spent centuries refining the tax laws of this country. When a loophole is found, usually by a bunch of clever tax accountants, they move pretty fast to close it down. As an accountant I can’t tell you how many times Average Joe, with a maths gcse to their name, has come up with a ‘way’ to not pay tax, aka tax evasion. It’s laughable. If you’ve thought of it, so have HMRC.