Employing my wife to manage my flat

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    Employing my wife to manage my flat

    Hi there,


    I own a flat hat I am about to start renting. Instead of paying an agent is it ok to pay my wife who is currently occasionally employed (self-employed) to manage it?

    Can I pay her as much as wish to make my rental income more tax efficient? I understand that she would need to declare this income on her self-assessment but even so if I am allowed to pay here 50% of the rental income I receive then my tax liabilities would be less. Would that be ok?

    Also one of my friends who is renting out 2 properties is declaring less from what he receives as he is paid in cash. I prefer to be paid via bank transfer as it less hassle but what are your views if I can be paid cash?

    Thank you

    #2
    Paying a letting agent to manage the rental of a flat costs about 10-15% of the monthly rent. So your wife can charge at most 15% of the rent.

    Its better if you give your wife a beneficial interest in the property . You can consult a solicitor to produce a declaration of Trust which gives her a 90% beneficial interest in the property and keep your share to 10%.

    Comment


      #3
      Agree with Gordon (but your wife will then own part - if you get divorced, die etc. So bear that in mind. 50% of the rent in your scheme will be a sham, will appear to HMRC to be a sham, and you will get burned. An agent will be 15% or less, your wife will be 5% of less of the rent to be plausible, and even that might not be.

      On your second point - well cheating and fraud is not good and that is what you are asking us - but receiving rent in cash is also a terrible idea. It leaves no audit trail. My ASTs say specifically that rent will not be accepted in cash, and if cash is the only option then they are to deposit that cash directly into my account. If you accept rent in cash what do you do when T fails to pay for three months and then produces spurious receipts from you (or even doesn't but claims he paid).

      Comment


        #4
        Originally posted by chris.flatley21 View Post
        Also one of my friends who is renting out 2 properties is declaring less from what he receives as he is paid in cash. I prefer to be paid via bank transfer as it less hassle but what are your views if I can be paid cash?
        You are friends with a fraud.
        Someone who is dishonest about one thing will always be dishonest in other ways.
        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

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