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Employ my partner to manage my property?

Started by pm1961, July 05, 2017, 02:14:58 AM

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pm1961

Hi,

As the title suggests, has anyone any experience on doing this?

I currently self manage but as a high rate tax payer , I was thinking about this as a possible way of reducing my tax burden.

She is a low rate tax payer, so it struck me as a reasonable thing to do to "keep the money in the household."

If this is a working idea, what will the IR allow as a "reasonable" fee to manage a property?

Any thoughts welcome.

Regards,

Paul

Hippogriff

It's a fine line between tax avoidance and tax evasion, sometimes, isn't it? What's the IR? Someone call the naughties (sic)!

Are you thinking of 'paying' your partner thousands and thousands, enough so as to be obviously unreasonable for the work conducted? Or a small amount per property? Letting Agents make their money from scale, you see, managing - hopefully - thousands of properties for relatively modest fees... if you're thinking of 'paying' your partner £20,000 to look after 2 properties then I think a computer somewhere would analyse that (HMRC there yet?) and be asking questions.

Above all - let's be brutally honest here - you'd not actually be paying your partner anything, right? It's a delusion, isn't it? A 'logical' payment... and the work also would not be done, right? You'd still be self-managing, right? You'd be employing your partner but your partner wouldn't be doing any work for you? You're not actually really going to do anything different, except some pretty false accounting, right?

I'm sure you see the problems, at least the moral ones.

Consider how it looked when we heard about all those MPs employing family members... to keep the money in the household.

If there's a real role in managing your property empire, I think you should go to the market and employ the best person for the job, nepotism is so old-hat, man.  ;)

pm1961

Thanks for the reply Hippo,

I hear you!

Just to put some scale on it..... It's no empire, it's one property. She effectively does do it anyway.... whilst I'm away doing the job that dumps me in the high tax bracket.

So what I'm proposing is not tax avoidance, just putting on a formal footing what already happens anyway. All above board, she declares it formally to the Inland Revenue (IR) and pays her 20% tax on it.

She certainly does a damn sight more than the agent that took 10% +VAT!

Morally? Yes, I could/would sleep easy because she does do the work. But, I know how it looks, so that's why I'm asking the question.

Nepotism? I'm not sure it's as "old hat" as you suggest...... I could name half a dozen local self employed business and tradesmen in my locality that I know personally who have family members "employed" in their businesses.
All of whom have a drive full of cars "essential" for the running of the business. etc etc.... Not just MP's!

Numbers wise, I know I'm only talking about a few hundred quid a year in the difference between our respective tax liabilities but as the new tax regime (on Mortgage interest) kicks in over the next few years, margins are going to get squeezed until their pips squeak.

ATB

Paul