Hi there!

Came across an interesting topic the other day! Person is in financial difficulties and wishes to claim CT benefit. He owns a 2nd property which he rents out making little or no profit. LA told him that it counts as an investment, not a business and are denying him. I presume they are treating this as capital and income.

I believe he isnt entitled to CT benefit because of this, and to say he isnt happy is an understatement.
Someone has suggested to him that he set up a small company, and transfer deeds to the company, hence he doesnt actually 'own' the house, and would be able to claim CT based on his income without the rent or capital from the other house.

Is this correct, personally I think that as a company director they will say he still owns the house albeit indirectly, and any rent that comes from it will be treated as income, and possibly capital. Therefore he wouldnt be entitled to CT benefit.

Any other thoughts on this?

This has to be short due to time...

The house may or may not have a value - it depends on who occupies it, whether the occupier is a lone parent and the age / disability status of the occupier(s). More info may help. Also, what steps (if any) are being made to sell it? Are there any other "joint owners"? What encumbrances, if any, are there against the 2nd dwelling (e.g. outstanding loans / mortage)?

If the property is correctly taken into account, the rental income is disregarded - it counts as income derived from capital which itself is deemed to be capital.

As for creating a "Company", I wouldn't bother. The Council would still take it into account as "notional capital" on the grounds that the capital has been disposed of with there being a "significant operative purpose" to obtain / increase CTB.