Setting up own maintenance co to work on own portfolio

Collapse
X
  • Filter
  • Time
  • Show
Clear All
new posts

    Setting up own maintenance co to work on own portfolio

    Hello - I have just retired as a builder/plumber. I have 4 rental properties and find it frustrating that I do work on these properties and yet cannot claim for my labour costs. I am considering setting up a small handyman company to do odd jobs for neighbours, family and friends. Could I then invoice myself when doing work on my own properties. I realise I will have to pay income tax on my income from the business, but could equally off set works vehicle, etc. Furthermore, I want to extend one of the houses and then sell it. Could I also invoice myself for my labour which could be set against Capital Gains tax when selling???
    Thank you in advance for any advice offered.
    Kev

    #2
    Connected companies invoicing each other is always going to look dodgy.
    It's one of those things that only huge companies seem to be able to get away with.

    If you are legitimately working for many others and occasionally working for your property business it's probably going to be OK.
    But it's not guaranteed to be OK, it's a question of degree and HMRC may take the "wrong" view.

    When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
    Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

    Comment


      #3
      You have to understand the way your income is taxed by HMRC.

      e.g 1. Your left hand receives £5000 from doing handyman jobs and your right hand receives £10, 000 profit from rental properties.

      Your total annual income .= £5000 + £10,000 = £15,000 and you will pay tax on this income.

      e.g 2 Your left hand receives £5000 from doing handyman jobs.and your right hand receives £10,000 profit from rental properties but your left hand fixes a leaking tap and invoices the right hand for £10,000.
      So at year-end, your left hand receives £15,000 from doing handyman jobs but right hand receives £0 profit from the rental properties.
      Your total annual income = £15,000 + £0 - £15,000. and you will pay tax on this income.

      So Tax Office has ruled that you are not allowed to charge for your own labour. .

      Re ; Adding kitchen extension or conservatory to a house and selling, you may be charged capital gains tax on the profit but you are not allowed to charge for your own labour.

      Comment

      Latest Activity

      Collapse

      • Allowable expenses on property income
        Landlord123!
        Hi,

        Are the following costs allowable (tax deductible) expenses on property income?

        1. Accountant fees for compiling and submitting my self assessment every year.

        2. Legal fees for transferring the ownership of the property from my sole name to joint names (with...
        25-05-2018, 11:30 AM
      • Reply to Allowable expenses on property income
        jpkeates
        I don't see that.

        A fee paid to a solicitor for legal advice or for conveyancing is not a "fee paid for ...registration of title on property purchase".
        That's something that would be paid to the land registry.

        It's an anomalous exception in any case, because...
        26-05-2018, 09:40 AM
      • Reply to Allowable expenses on property income
        AndrewDod
        Correct. And not legal fees relating to this aspect either....
        26-05-2018, 09:11 AM
      • Rent a room scheme
        K335D
        Hi,

        I have read up on this subject but I am unclear re the following scenario.

        I own my own home in Glasgow. This is my only home.

        I have been made redundant, and my work is offering relocation to London.

        I would like to retain my home in Glasgow -...
        24-05-2018, 13:59 PM
      • Reply to Rent a room scheme
        theartfullodger
        Gordon spot on, but in Scotland a lodger is does not have a licence but a "common law tenancy" (paperwork suggestions Gordon makes I'd agree with...) and if he doesn't go when asked you need a Sheriff Court decree - see...
        https://scotland.shelter.org.uk/get_...vice_topics/re...
        26-05-2018, 08:43 AM
      • Reply to Rent a room scheme
        Gordon999
        There is nothing to prevent OP keeping his home in Glasgow and taking on a lodger.

        But the lodger must be covered by a licence stating the payment of rent ( weekly or fortnightly or monthly ) and what notice period must be served to quit by each side .

        https://www.gov.uk/p...
        26-05-2018, 04:16 AM
      • Reply to Allowable expenses on property income
        Gordon999
        The Notes for SA105 Tax return gives the expenses for entering in box 27 as shown below :

        Box 27 Legal, management and other professional fees

        You can claim:
        • management fees paid to an agent for rent collection, advertising and administration
        • legal and...
        26-05-2018, 02:10 AM
      • Reply to Allowable expenses on property income
        AndrewDod
        I am not sure I agree on the legal fees for transferral jp.

        Take spouse part out of it as that complicates it. If I were to transfer part of a property to my friend, that cost of transfer would be capital and offset against later capital gains. Not really different from selling the whole...
        25-05-2018, 19:14 PM
      • Reply to Allowable expenses on property income
        jpkeates
        If the property is let or about to be let, 2 is definitely allowable.

        1 is debatable.
        It's something that everyone does (including me), but it probably fails the solely and exclusively test, so it probably shouldn't be allowed.
        For many people, the need for it arises as a direct...
        25-05-2018, 12:42 PM
      • Reply to Rent a room scheme
        jpkeates
        There's a significant difference between a main residence for tax purposes and a main residence for a property licence.
        You can nominate your principle residence for tax purposes (as many MPs do) which is fine for tax purposes.

        It doesn't have the same effect when it comes to determining...
        25-05-2018, 09:35 AM
      Working...
      X