renting a house from parents

[s-bentley]

hi i own a semi detached house, my in laws own the house next door, which they have been renting. we wish to rent it and knock through a wall so we can use bedrooms/bathroom without having to go outside. we will still pay bills as if 2 seperate homes. does anyone know if ok to do this and what the legal minimum rent is, as inlaws don't really want any payment x

[buildersmate]

You can knock a hole through the adjoining wall to join the properties - no problem. The adjoining wall is structural so must have a lintel over and be done to satisfy Building Regs. No other permissions required.
It will not make any difference legally, utilities bills or council tax rating - the two properties are still regarded as separate independent. You would be well advised to make the change in a way that it can be permanently blocked up again later, as two properties are more valuable than one when it eventually comes to selling up.
It is perfectly possible that no rent is charged by the in-laws - it is between you and them. The only potential issue that the in-laws should be aware of relates to lifetime gifts in connection with inheritance tax. Because the in-laws are effectively 'giving' the market value of the rent to you, an issue arises in the (unlikely) event of them both dying whilst this 'gist' arrangement has been occurring. The executor of the estate of the second-to-die would have to look back 7 years to see what 'gifts' had been made and declare the value - and at a market rate of say £600 per month, this could be as much as £35k in value over the full 7 years. This sum then gets added to the value of the estate for the purposes of IHT assessment. Of course, inheritance tax is only anyway paid if the IHT threshold is exceeded. Just something for them to be aware of.