Can I pay my partner for managing my property - and book keeping?

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    Can I pay my partner for managing my property - and book keeping?

    Hi all

    My partner doesn't currently work.

    I was thinking that on the two properties I rent out, which I currently manage, she could cover all aspects of the property management instead, from finding tenants to arranging when any DIY needs doing etc etc.

    Also, she could do the self assessment tax return for me, so all my book keeping.

    This would make good use of her tax free allowance, which we don't currently use.

    Is there any reason that she cant officially cover the management of both properties, in terms of her qualifications (none specific to property management, but then neither have I), and then how the tax returns work?

    So for example I'd pay her 10% of the rental income on both properties, so call it £300 a month, plus say £250 a year for book keeping.

    She'd then need to fill in her self assessment, but wouldn't need to pay any tax, of course.
    I assume this is quite common? Other than showing that I transfer her money each month, what other proof/receipts are needed please?

    Many thanks

    #2
    Assuming she isnt claiming any benefits that may be affected, Id say thats fine. I take it her name isnt on the deeds? If it is you could maximise her personal allowance for the rental income through Deed of Trust. If you go down management route then you would need an agreement between yourselves drawn up & a paper trail for work done. There are people more in tune with contracts & legals on here than me, but somethin g for you to look into

    Comment


      #3
      Would HMRC challenge that arrangement?
      Yes, it's a complete fiction.

      Will they?
      Hard to say, as they're a huge organisation and this is a small evasion - so you might get away with it.
      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


        #4
        Lots of MPs employ family members, and pay them more than they would pay unrelated employees. The money comes from our taxes, and they're allowed to do it. I can't see why the OP shouldn't employ his partner for a fair amount.

        Comment


          #5
          Because a landlord can't offset their own labour for tax purposes, so this creates a reduction in tax where previously there would have been none.
          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


            #6
            Originally posted by Kay Powell View Post
            Lots of MPs employ family members, and pay them more than they would pay unrelated employees. The money comes from our taxes, and they're allowed to do it. I can't see why the OP shouldn't employ his partner for a fair amount.
            One rule for them and one for us!

            OP does say his/her partner would take over the management of the properties so I don't see why this wouldn't be allowed.

            Comment


              #7
              Thanks for the replies.
              Sorry which bit is fiction please?
              If my partner is not working, doesn't part-own the property and is happy to undertake all management company duties, whats the issue please?
              Im asking as I just want it all to be order in terms of what HMRC need to see.

              For example her bank account would show Im paying her, but what proof does she need that shes doing it?

              She'd be the point of contact on the tenants info pack, and would be sorting out any issues with the place by phoning DIY people etc, keeping on top of tenancy paperwork etc just like any management company? Lets face it theres not much to do for her 10% fee? But that's just the nature of the job.

              Comment


                #8
                Lots of sole traders 'employ' their wives to do their book keeping. I can't see why this is any different. BTW, I believe they can also pay any money over the zero band into a pension, and get tax relief on it.
                To save them chiming in, JPKeates, Theartfullodger, Boletus, Mindthegap, Macromia, Holy Cow & Ted.E.Bear think the opposite of me on almost every subject.

                Comment


                  #9
                  Some London letting agents charge 15% +VAT fee .

                  So I suggest you can raise her fee from 10% to 15% of monthly rental income

                  Comment


                    #10
                    Originally posted by Gordon999 View Post
                    Some London letting agents charge 15% +VAT fee .

                    So I suggest you can raise her fee from 10% to 15% of monthly rental income
                    Best not to push your luck. Letting agents have overheads.

                    Comment


                      #11
                      Originally posted by bhodgkiss View Post
                      Thanks for the replies.
                      Sorry which bit is fiction please?
                      If my partner is not working, doesn't part-own the property and is happy to undertake all management company duties, whats the issue please?
                      Im asking as I just want it all to be order in terms of what HMRC need to see.
                      In retrospect my response made a number of assumptions, so "fiction" is probably a bit much.

                      If your partner is really going to do the job and be recompensed for that work, that's not a fiction.
                      She would need to register as a letting agent with a redress scheme and follow a code of conduct.
                      She'd need to register as self employed with HMRC and pay NI.
                      You'd actually have to do the job.

                      My assumption was that you were more concerned with how to present it to HMRC rather than your partner actually doing the job.
                      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


                        #12
                        Many thanks for the info - I'll look into it

                        Comment


                          #13
                          I would suggest your wife starts a one day per week home visit help service e.g for light bulb changing , flat cleaning, birthday card sending and baby sitting and keeping records etc.

                          if she keeps her annual income below £5K, there is no tax return to make and no NI to pay.

                          Comment


                            #14
                            Many thanks

                            Does she need to do a tax return if her income is less than £5k total a year from being a letting agent?

                            Comment


                              #15
                              The personal allowance now is over £10K before start of paying 20% income tax and £5,900 approx for start of NI.

                              It does not matter if hmrc asks for tax return to be submitted , there is no income tax to pay under £10K.

                              What does matter is that she needs more than one customer because if you are her only client , hmrc may think her service as a letting agent is fiction.

                              Comment

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