SMF - Just Installed!

How much can my wife charge as letting agent for me?

Started by El Porto, March 19, 2018, 03:16:04 PM

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El Porto

Hello!

As a first time landlord, i want my wife to handle absolutely everything for me. This will be her 2nd job, although her main job is low hours and relatively low pay.

I want her to charge 30%. This will still mean she does not earn enough to go over the tax threshold, and will mean of course that my tax liability is lower. We intend to account for the revenue in an annual self-assessment.

I genuinely want her to do all of the work, but i am not worried that she will be charging more than the market rate.

I would like to hear the opinion of everyone - is this legal, and can she charge whatever percentage she wishes (as long it is "reasonable") and can justify the fee.

Thoughts?

Hippogriff

Best to talk to a dodgy Accountant about your tax evasion plans. Sorry, avoidance... it's such a fine line.

David M

If she wants to act as an agent don't forget she needs to comply with formalities such as anti-money laundering registration, join a redress scheme etc etc. I suspect the fines for missing something like this will make you wish that you'd paid the tax.

El Porto

Quote from: Hippogriff on March 19, 2018, 05:35:22 PM
Best to talk to a dodgy Accountant about your tax evasion plans. Sorry, avoidance... it's such a fine line.

Genuinely, my wife will be taking complete control of the property and will in fact be doing the work of a lettings agent, so it is only fair she is remunerated for that work. Yes, it is beneficial in tax for us.

Having checked the HMRC website she will not have to register for the anti-money laundering registration, however the redress scheme does look like something we'll need to look into.


Simon Pambin

It used to be quite common for sole traders to pay a "wife's wage" just below the threshold for tax and NI. I've never heard of it being done for a property rental though, and these days you'd probably have to set up a payroll for RTI reporting purposes: your wife wouldn't be regarded as self-employed if she only has one customer.

The more conventional way to arrange things in a tax-efficient manner would be to gift your wife a beneficial interest in the property so that a portion of the rent is treated as hers for tax purposes. You can do this by means of a declaration of trust. As you're not transferring the legal title it's a relatively straightforward process and shouldn't affect your relationship with your mortgage provider.