Buy to let tax

John
John Registered Posts: 52 Regular contributor ⭐
in Tax
Are my partners residential buy to let profits considered as earnings in the same way as being employed would or are they viewed as a separate investment entity ? ie. She is disabled and unable to work and receives incapacity benefit, which is taxable, although below the threshold for paying any tax. However, is the remaining part of her nil tax band allowance able to be offset against her small buy to let profit ?

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  • Monsoon
    Monsoon Registered Posts: 4,071 Beyond epic contributor 🧙‍♂️
    John wrote: »
    However, is the remaining part of her nil tax band allowance able to be offset against her small buy to let profit ?

    Yes. Lets say the personal allowance is 6k and the Incap is 4k, she will have to make 2k profit on the rental income before she pays tax.

    It's not earnings, in the sense that she doesn't get the money from working and thus shouldn't affect her Incap.

    Disclaimer: while that is logical, DWP work on different rules to HMRC so best to double check, though I'd be really surprised if they made an issue of it.

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