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  • Tax

    Claiming cost on work done by family members

    Hi there, I wonder if you can help:

    We have a portfolio of properties in your own name (husband+I), that we rent (to students). During the summer months, we need to renovate/refurbish/decorate etc and use different labourers, including: 1. builders/decorating companies, 2. Ourselves and 3. Our children

    In terms of claiming back the costs of these labourers. I wonder what other landlords are doing:

    • Claim any work done by a builder/decorating company: YES, we have invoices
    • Claim any work done by yourself:  NO, (not allowed)
    • Claim any work done by your children (16-18 years old)/nephew (early 20s). We pay them cash. >MY ACCOUNTANT SAYS THAT THIS DEFINITELY CAN BE CLAIMED, as, effectively we employ them, instead of employing a decorator. My kids also do admin work during the year.

    According to my accountant, paying cash (without receipt) to family labourers for small amount of money (up to 2K a year each), is OK, but if we want to pay them up to 8,164, then we need to set it up properly with the accountant and issue monthly payslips etc. I would be grateful if you could share your experiences as to what you actually do / what is permissible.

    thanks... Margarita

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    The odd bit of work, cash-in-claw, to family members up to £8,164 pa?  Blimey, they must be very skilful to bill that much!

    And when HMRC run a random investigation into your tax return, guess what will happen...

    And these family members, you've checked that have previously & will in future be reporting their earnings to tax-man under self-assessment?

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    Hi there,

    it is not the odd bit of work, it is working intensely for 6-8 weeks in summer 10 hour days to paint, decorate/refurb/fix rooms, communal areas, kitchen, bathrooms, gardens, disposals of huge amount of rubbish/broken furniture, searching for new renewals etc etc  for over 50 tenants.

    This cost tens of thousands, if given to a refurb company to do and needs to be done every single summer. I am guessing you do not have a sizable student let business.

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    and actually all will be fully declared to HMRC with monthly payslips etc. The £8,164 pa is not the figure that we will actually pay, could be less.

    The £8,164 is the limit for not having to pay NIC, and no pension or tax would be due to the workers as they do not have any other jobs, thus will be under the 0% tax band allowance.

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    The primary rate threshold to avoid NIC is £157 per week for the current tax year (£8614 pa) however where the pay is above £113 per week the employer will still need to register for PAYE as any income between £113 and £157 per week is treated as paying a notional NIC rate and the year will count towards state benefits and state pension etc

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    You may guess what you wish! Had new CH & radiators & pipework during summer break at one student lettings (replacing warm-air), demolition of 2 shed, rebuilding one brick-shed, roof, electrics, water.  Couple of DG windows & door soon plus various minor, less than £1k ods & sods.  And upgraded paid-for broad-band to 200Mbps (no, really, I've measured it): The students really like BB working fast & from day one they move in.

    Apologies, when you mentioned "Cash" I thought, sounds like erroneously, it would be cash-in-claw no paperwork: Yes, if payslips, tax (presumably emergency) & NI paid but the wages as cash, yes, entirely legal: If a little uncommon these days.  Sincere apologies if I'd misunderstood: (there are rather too many dodgy tenants, agents, landlords, MPs about who get up to no good...)  HMRC's suspicions might be raised mind by the cash (both ends, landlords & workers).  Do you have HMRC investigation cover?

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    NLA  membership INCLUDES  Tax Investigation Insurance ( for Rental business )

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    A friend of mine has just upgraded to over 900Mbps broadband.

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    Thanks Don Frump. yes, another benefit of doing this is "by the book with payslips" with HMRC is for kids can start with the NIC to count towards state benefits and state pension.

    I guess as long as the total pay is below £8614 pa, it would not mater if one week you go above the  £157 and other below.

    Thank you theartfulllodger, no need to apologies, I was just thinking whether any small amount of cash was allowed until we actually get all the payslips in place.

    My reason for doing this is 5 fold: 1. family working together to build the business. 2. kids learning how to actually do this jobs with the hope they may take over the business and even if they do not, it will be useful for running their own houses and 3. Teach kids the work ethics, useful in any walk of life 4. ensure that kids learn how to do a high standard job, because sometimes refurb companies employ anyone that does a bad job and I spend weeks/months arguing with them and in the end end up doing it myself!! The 5th and final reason is that it will cost me less than giving it to a refurb company (cheap escape!).


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    Not sure whether this would apply for your circumstances; but even small employers are required to set up a pension scheme.


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