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

      • Adding wife to BTL property
        ringzer
        In 2005 I bought a BTL property in London with an outstanding mortgage of ~£150,000 and a current market value of ~ £500,000. The apartment has never been lived in by me and my name alone is on the title deeds and mortgage.

        I would like to add my wife to the property, either 1) title...
        18-02-2019, 17:37 PM
      • Reply to Adding wife to BTL property
        Kape65
        You're right, I remember that post. I agree that it's possible to do it but I feel if HMRC did take the time to view it then it could be classed as fraudulent, evading stamp duty and income tax.
        19-02-2019, 17:00 PM
      • Reply to Adding wife to BTL property
        jpkeates
        Beneficial ownership is a can of worms and HMRC aren't in any position to dispute what a married couple assert to be how they want to split the beneficial ownership, regardless of title.

        Someone posted on here a while back, and I made pretty much the same point (which was that the deed...
        19-02-2019, 16:35 PM
      • Reply to Adding wife to BTL property
        Kape65
        I always believed that a DOT was used because normal ownership of tenant in common property was automatically registered as 50/50 split when the true ownership may have been different i.e wife has put more money in or such. Surely to transfer a percentage to your wife and then use a DOT to claim that...
        19-02-2019, 15:24 PM
      • Reply to Adding wife to BTL property
        jpkeates
        Where property is owned as tenancy in common, the default presumption is that each tenant owns the property in equal proportions.
        But that doesn't have to be the case, the ownership can be shared in specified proportions, so 1% and 99%, or 60%:40% are possible.

        That split would normally...
        19-02-2019, 13:51 PM
      • Reply to Adding wife to BTL property
        Gordon999
        I think the solicitor may arrange a sale contract of 25% share in property from H ( seller ) to W ( Buyer ) at Nil price . but the Tax Office will say the consideration is 25% of mortgage loan for calculation the sdlt to pay.

        After the property is registered under the names of H&W (...
        19-02-2019, 13:30 PM
      • Reply to Adding wife to BTL property
        Kape65
        Is this possible (genuine question)? I understand the tenants in common bit but I thought you then needed a declaration of trust in order to change the proportions....
        19-02-2019, 13:04 PM
      • Reply to Adding wife to BTL property
        Gordon999
        Option 2 is not available because you have a mortgage loan ( in sole name ) secured by the mortgage lender taking a charge on the property title. This means any change to the property title requires consent by the mortgage lender.

        You can transfer by gifting a 25% share in the property...
        19-02-2019, 11:55 AM
      • Reply to Adding wife to BTL property
        jpkeates
        Tenants in common - which allows each person to own a defined share of a property.
        You can transfer 1% of a property to someone (at the value of 1% of the total property value at the time).

        Totally agree about the mortgage lender....
        19-02-2019, 10:44 AM
      • Reply to Adding wife to BTL property
        Kape65
        This intrigues me, how do you transfer a small part of title? I know you can split beneficial ownership of jointly held property but how do you transfer a small part of title prior to changing beneficial ownership.

        I'm not sure your mortgage company will allow a transfer of title only,...
        19-02-2019, 10:41 AM
      Working...
      X