Benefits and property

Caterina

Evening all 

I’m after some advice please. My father has gifted me a property that he owns which has tenants in situ. I don’t intend to move into the property and intend to keep renting the property out.I live in private rented accommodation and claim universal credit. I have limited capability for work and work-related activity. 

Will this affect my universal credit in any way? 

Many thanks 

poppy123456

Yes, if the capital in the property is more than £16,000 then your UC will end. You need to make sure you report the changes onto your journal.

MW123

As you are not living in the property the value of the house will count as an asset.  You'll need to pay tax on any profit you make. You can work this out by deducting all your allowable expenses from your rental income.

ShirleyW

MW123 said:

As you are not living in the property the value of the house will count as an asset.  You'll need to pay tax on any profit you make. You can work this out by deducting all your allowable expenses from your rental income.

Your post has no relevance to the question asked by the opening poster. 

He has not asked about the taxation position of the house but about the impact on welfare benefits received. 

Cher_Alumni

Hello @Caterina and a warm welcome to our online community, how is your Friday going?

Do you better understand the impact of the house on your universal credit? If anything remains unclear, please do give us a shout.

Wishing you a great weekend.

MW123

Universal Credit is a means-tested benefit that's paid monthly. It's designed to help you if you're on a low income or out of work.  If you own a property you do not live in, they will count the value of the property as a disposable asset when calculating means-tested benefits.  As Catrina is intending to rent the property out she will also receive an income from the rental so Catrina's Universal Credit payments will be affected.  If I was Catrina I would move into the property and give up private rented.   This would basically put Catrina back in the income bracket she is now, just with minus any benefit she may receive toward her private housing rental costs.  

poppy123456

MW123 said:

 As Catrina is intending to rent the property out she will also receive an income from the rental so Catrina's Universal Credit payments will be affected.

That's not correct for UC purposes. If it's your only property that you rent out then the income from it will not be treated as income, it will be treated as capital. As i advised in my first comment, if the capital in the property is more than £16,000 there will be no entitlement to UC anyway.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1145107/admh1.pdf

H5094 The types of income which might be derived from capital include

1. interest

2. dividends and

3. rental income.

....

Example 2

Scoot owns a second property which he does not live in as his home. Scoot rents the property and receives rental income as a result. For UC, the capital (the second property in this example) is treated as yielding an income and the actual income derived from that capital (the rental income) is treated as part of Scoot’s capital from the date it is due to be paid.