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

@coucoululu pretty sure that under 16 year olds are not permitted to own properties so dont know how you will get round that one. How does baby get taxed on income if they do not even have an NI number or tax number. they will not be registered for paying tax. simpler just to keep within the rules and do it under your own name. the one who received the smallest wage would be best.

Cambridge-educated chartered accountant here. He is wrong (and a muppet for doubling down on it once he'd been shown to be wrong).

There's a decent explanation here: https://www.taxinsider.co.uk/transferring-rental-income-antiavoidance-problems

Basically, if you gift ownership or part-ownership of the property to DC, you may be able to declare the income to be theirs, but you'd have to pay stamp duty and capital gains tax when transferring ownership, and there are further rules in place to prevent this kind of tax avoidance.

It can get very complicated, and extremely expensive! Cheaper to just pay the tax.

Once HMRC get a sniff of wrong doing, you can probably expect them to go back years and years of accounting too. Everything will be examined.

Can you stay with someone so utterly stupid?

He's an embarrassment.

Trying to dodge tax on a second property. I've heard it all now. And people have the gall to whinge about UC claimants.

Your DH sounds simple. If the flat is in your names then you are liable for tax.

My DH is an accountant and owns lots of btl properties and pays tax on them all because that is the tax laws. Tell your DH he is not special he has to pay tax like everyone else.

🙋🏻‍♀️ Oxford educated lawyer here. No of course he can’t do that. There’s tax evasion of course (even the dinner ladies know that!) but there’s also the fact that a 10 month old can’t own a property legally or beneficially. You can hold it on trust for them - but you still have to pay the tax.
Please don’t be fed up - you were right!

Do you really need to ask!!!!

I refer you to https://www.mumsnet.com/talk/am_i_being_unreasonable/4984561-to-think-we-cannot-accept-rent-via-dcs-bank-account?reply=132209940

The point was that we are not dinner ladies with one GCSE. It would seem that I wasn't clear enough.

Law of Property Act 1925 S1 p6 prohibits minors from owning property.

Just out of interest... was the money just going to sit in a savings account for your child until he was 16... or was your husband planning on using said money for the living expenses of your son?

OP says it's for the DC, though not specific.

My money is on dad raiding the child's piggy bank.

Ha well my best mate is an "Oxford qualified" lawyer whatever that counts for and she says it's illegal. You'd still get taxed on the income even if you gifted child the house.

As an aside, it's not ok for him to get angry at you like that. Are you ok?

That is absolutely illegal. And even if you put the house in your child’s name it would still be illegal. It is very unimaginative as well, it isn’t even clever illegal.

@VitoCorleoneOfMNMafia it was a joke 😀 I know what STEM is - my degree is Mech Eng! Perhaps it would have been more clearly a joke (with OP’s arse of a husband the butt) if I’d put, “OP’s husband would think that was flower arranging”. It was just poking fun at the fact he thinks we’re all thick as the mince we prepare for school dinners 🤣

@Trilateralcommission@Trilateralcommission2 - A few people have already stated they are qualified in this area and think the plan is batshit. As for providing free tax planning advice on how OP can avoid tax? - no, her and DH can pay for that. It’s not up to us dinner ladies with one GCSE to provide that.

This is only relevant to spouses who have lots of allowances in tax law. Irrelevant for parent and children.

My first advice would be to not go into business with your husband as he’s a bit dim, argumentative, and cant take criticism.

If you are going ahead I’d suggest asking an accountant for the best ways to structure your tax liability. Not sure why he thinks an Oxbridge lawyer would be more helpful than an accountant.

Is he always so nasty and disrespectful towards you? I’m another one who suggests moving into the flat with your DS and divorcing him.

Hang on a moment - all those people saying just pay the tax have no idea of the OPs exact situation. They may know or even be a Tory MP, or be a massive multinational corporation, in which case obviously they won't pay any tax.

It's important to have all the facts, remember.

@SerendipityJane - you are absolutely right, how could be have been so stupid

No, that's tax evasion. When you get caught you could end up paying the tax plus interest and penalties. Just pay your tax.

I am going to unfollow this thread because I am feeling so awful about the whole thing. I agree with the replies here but DH is annoyed that I am. And I am feeling more worse by reading it. Thank you all for your advice and help and I'm sorry my DH is being so rude.