Buy to let / incapacity benefit

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John
John Registered Posts: 52 Regular contributor ⭐
in General accounting discussion
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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  • ahmedt01
    ahmedt01 Registered Posts: 11 New contributor 🐸
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    does your partner also live in the property that is rented out, ifso then theres the rent a room scheme. if she doesnt then it will be taxable at the appropriate rate.
  • John
    John Registered Posts: 52 Regular contributor ⭐
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    No she doesnt live there. I understand that any profits are taxable, but does the nil rate allowance work in the same way as it would for employment income - just because she rents a property out I dont think shes classed as self employed.
  • deanshepherd
    deanshepherd Registered Posts: 1,809 Beyond epic contributor 🧙‍♂️
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    Yes, her remaining personal allowance will be used to offset against the rental income.
  • John
    John Registered Posts: 52 Regular contributor ⭐
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    Thanks for your reply. Is buy to let considered self employment or an investment ?
  • Dean
    Dean Registered Posts: 646 Epic contributor 🐘
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    John wrote: »
    Thanks for your reply. Is buy to let considered self employment or an investment ?

    Hi John

    It's investment income. A tax return will need to be completed because it is a source of un-taxed income. Even if you have made a rental deficit it is still reportable.

    Regards

    Dean
  • John
    John Registered Posts: 52 Regular contributor ⭐
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    Thanks Dean.

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