Can a non-professional tenant be paid to do work on the property?

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

    Can a non-professional tenant be paid to do work on the property?

    Hi!
    First of all thank you for all the information on here and great forum chats, they've really helped me.
    I have been helping my aunt do her tax return for her two properties that she rents out. I run my own small business so I'm used to tax, but this site has helped me with the specific landlord issues and tax questions.

    I just have one question, as in the title! So in one of her properties, the fence had completely broken. She's got great tenants who put up the new fences and posts and she paid them for their time, cheaper than the fencing people quotes. I am guessing she now can't deduct that as an expense though? Is that correct?
    She's got another couple of instances of it when they worked on the property, so as it's not a one-off situation I thought I'd better check. They are not professional tradespeople, so it would just be a paper receipt/contract written up between them for an agreed price. I wouldn't run that through my business, but just to check!

    Many thanks
    Jo


    #2
    If she paid someone to do some work, it's an expense.
    If it was wholly and exclusively for the business (which I think this was), it's allowable against income.

    It's also income for the tenants, so in future, I'd pay them by discounting a rental payment which is more tax efficient than making an actual payment.
    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
      Discounting the rental payment is a payment in kind, so still taxable against income tax.

      Comment


        #4
        Yes, but it's better for the landlord.
        And one would ever spot it for the tenants in real life (either way to be honest).
        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


          #5
          Tenants should invoice Landlord for expenses and labour, Landlord should pay bill. No change in rent amount.

          Claim invoice normally.

          But using unqualified workers often gives issues eg electric not documented etc.

          ​​​​​​Not the sort of relationship I'd want with a tenant
          I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

          Comment


            #6
            A non-professional tenant is unlikely to have the right sort of public liability insurance.

            Also remember that, as a non-domestic client, you are responsible for health and safety, so should vetting their health and safety processes, as you really should be doing for your professional contractors.

            Comment


              #7
              Repair of fencing, garden work and cleaning work does not require to be done by professional trades workers. This type of work can be done by diy casual workers.

              If your Aunt has paid for the work and got a receipt for her payment , then include it as an allowable expense.

              Comment


                #8
                Thank you everyone, those opinions are all really useful in weighing up the pros and cons as well as expense situation.
                I really appreciate your time replying, so thanks again.

                Comment

                Latest Activity

                Collapse

                • Reply to Caught out by changes to Capital Gains Tax
                  by jpkeates
                  You have to make the return to tell HMRC there is no tax to pay, if that's the case.
                  There is no option not to tell HMRC....
                  09-12-2021, 09:58 AM
                • Caught out by changes to Capital Gains Tax
                  by reluctantlandlord1976
                  I appreciate 'ignorance' is no excuse, however there are some mitigating factors, i.e. due to illness etc.

                  1. Previous family home rented out - terrible tenants - left owing rent, bad repairs etc. [usual story for some] subsequently property not let for 2 years for a number of reasons while...
                  06-12-2021, 13:51 PM
                • Reply to Caught out by changes to Capital Gains Tax
                  by Gordon999
                  I think Andrew is correct .

                  You start with 1/3 interest ( in 1982 valued at £6500 ? ) plus 1/6 interest from parent1 ( valued at £20K ?) plus 1/2 interest from parent 2 ( valued at £60K ? ). This probably takes your total entry cost to around £40K.

                  Your total capital...
                  09-12-2021, 09:47 AM
                • Reply to Caught out by changes to Capital Gains Tax
                  by reluctantlandlord1976
                  Hi Andrew
                  First of all I've got an initial appointment to speak to an accountant on Friday!

                  Can I just check where you write ' ...at death 1/6th of the value of the whole would have been deemed to pass to you for CGT purposes as the survivors would share the whole'.

                  Does...
                  08-12-2021, 18:02 PM
                • Reply to Caught out by changes to Capital Gains Tax
                  by jpkeates
                  Even if probate wasn't mandatory, it would probably have been useful.
                  08-12-2021, 13:44 PM
                • Reply to Caught out by changes to Capital Gains Tax
                  by AndrewDod
                  Yes this would be the case if it was jointly owned (not as tenants in common). The situation would be that at death 1/6th of the value of the whole would have been deemed to pass to you (for CGT purposes), as the survivors would share the whole.

                  So for the 3 periods you would be taken...
                  08-12-2021, 12:51 PM
                • Reply to Caught out by changes to Capital Gains Tax
                  by reluctantlandlord1976
                  jpkeates
                  There was no estate as such, property jointly owned - they were both retired at time of purchase living on small pensions, hence I bought with them so they could stay in the home they'd been renting from council from early 1950s to March 1982 at time of purchase. And I paid for the initial...
                  08-12-2021, 10:50 AM
                • Reply to Caught out by changes to Capital Gains Tax
                  by jpkeates
                  I don't know the historic thresholds, but it's bizarre that there's no probate for both of your parents, their estate has to be tiny for that to be possible nowadays.
                  It's probably too late for HMRC to do anything about that, but that process sets the values for CGT calculations later on, so it's...
                  08-12-2021, 10:28 AM
                • Reply to Caught out by changes to Capital Gains Tax
                  by reluctantlandlord1976
                  Morning Andrew
                  Thanks for your response early this morning and clarifying I have to make three separate calculations [the split wasn't clear on the CGT calculator].
                  I understand the query on the value but this is an ex council house on a council estate [I feel I have to defend it here as...
                  08-12-2021, 08:45 AM
                • Reply to Caught out by changes to Capital Gains Tax
                  by AndrewDod
                  As gordon indicates you need to consider it in three entirely separate parts, each have their own gain and calculation --

                  The part YOU owned before Death 1
                  The part YOU owned between Death 1 and Death 2
                  The part you owned after Death 2

                  Based on the values you give...
                  08-12-2021, 05:52 AM
                Working...
                X