Showing repair/redecoration as expense, when work done by friend ?

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    Showing repair/redecoration as expense, when work done by friend ?

    I will be soon be letting out my flat as we are moving to a house. I had to refurbish the flat (like to like) to make it rentable. So have done some painting and also put in a new bathroom (again like to like, nothing fancy).
    A friend (who is also my neighbour and a ex-builder) helped me do the renovation over 3 weeks working over evenings and weekends.
    He has done a really good job and I have learnt a lot working with him
    I have agreed to pay him some money (2000 pounds)for his work.


    I was hoping to be able to claim these as expenses agains the rental income. I have receipts for all the material that I have bought from Selco, B&Q etc, but since my neighbor isnt trading any more as a builder (He works for Selco), he says he doesnt have vat registration or a receipt book .

    Is there any way I can get a receipt for the work he has done for which I will be paying him. Offcourse the time I have put by myself cannot be invoiced, but I was hoping to atleast put some expense for the money I have paid.

    Can I just get him to sign a paper saying I have paid him such and such amount for the following work (painting/tiling)?

    My first time with the renting /tax thing.
    Also I have a repayment mortgage, so will be paying principal and interest, of which only interst is consdered expense. Hence want to reduce tax as I may have to pay out of pocket as I will be in defecit after tax.

    Any suggestions / tips ?

    Thanks.

    with regards
    Taz

    #2
    You don't have to be registered for VAT or to use a "receipt book" to produce an invoice or receipt.

    Comment


      #3
      So may be I just print out a list of jobs he did and the amount I paid for each and get him to sign it . As simple as that?
      I am sure my neighbor wont have a receipt book as he never worked for himself.

      Comment


        #4
        He just needs to produce an invoice for the amount you are paying him. That's it. A typed up invoice in Word on a sheet of A4.

        Comment


          #5
          And pay Income Tax (and possibly NI)on the sum(s) received.

          Comment


            #6
            Yes but that still wouldn't stop tazinuk claiming the expense

            Comment


              #7
              But may explain the reluctance to provide an invoice?

              Comment


                #8
                I've just gotten into a similar situation whereby my caretaker did a lot of work for me and I pay him casually. I mean, it's really casual, he never asked for anything and no amounts were agreed, but he is super nice/good and available as and when I need him. So I've give him considerable sums (hundreds not nearly near thousands) over the last 2 months and need to give him some more now.

                When doing the tax return is it required to actually submit receipts or are they for us to keep incase we get audited. In other words can I claim the amounts I've paid him as expense even though I don't have a receipt?

                Comment


                  #9
                  Originally posted by Bird View Post
                  When doing the tax return is it required to actually submit receipts or are they for us to keep incase we get audited. In other words can I claim the amounts I've paid him as expense even though I don't have a receipt?
                  No, you don't submit the actual receipts, but yes you do need to have them on file as you'd be in a mess if HMRC asked for any further information about your Tax Return as you have no proof whatsoever of expenses you've claimed. It's hardly unreasonable - otherwise what would there be to stop you from claiming £5,000 decorating expenses off next year's rent, paid to a bloke you met down the pub - no receipt, can't remember his name, think he's left the area now...

                  As your caretaker is around and available and super nice, maybe you could obtain a 'retrospective' receipt later, if the need should arise if you get audited; however since I'm guessing you paid this guy in cash as a present/thank-you, I doubt he's declared the money to HMRC which will open a whole new unpleasant can of worms...

                  Comment


                    #10
                    Yes, my caretaker does all sorts of jobs for all the tenants "on the side" and all the tenants are very grateful as he is reliable and nice and there when we need him. So no one is bothered about how he handles his financial affairs. I suppose I should make no comment about it whatsoever. However it would be a big shame if this means I can't /shouldn't continue to use him.

                    Oh, OK, another question. If I ask him to write me a receipt (now), in practical terms what implication does this have on HIS tax affairs?

                    Thanks

                    Comment


                      #11
                      Originally posted by Bird View Post
                      If I ask him to write me a receipt (now), in practical terms what implication does this have on HIS tax affairs?
                      Depends what conversation you've already had with him about money/tax - my guess is none, right? If you include cash sums paid to him as a business expense on your tax returns, then if he isn't declaring it as income to HMRC himself then he's already "at risk", but only if HMRC audit you and you subsequently tell them about him. But I don't suppose he's aware that he's appearing as an expense on your tax return, is he? Without getting into the rights(?) and wrongs of the black economy, you should at least make him aware of that.

                      At that point the difference between the existence of a receipt and not, is that in the event that HMRC audit you, if it doesn't exist then the caretaker could deny all knowledge of any such payments; however if there is a receipt then there is proof of them. It would also cover you against potential accusations of collusion in tax dodging, which is always possible when large sums are paid by cash.

                      Until/unless you do get investigated, it would make no difference whether you get a receipt or not.

                      Comment


                        #12
                        OK, thanks. No, I haven't had any conversation with him on this. He doesn't even ask for a specific sum. I just later give him something. The sum is not in the thousands. Just low hundreds.

                        Comment

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