X

Sign Up

or

By signing up I agree to Property Tribes Terms and Conditions


Already a PT member? Log In

Sign Up

Sign Up With Facebook, Twitter, or Google

or


By signing up, I agree to Property Tribes Terms and Conditions


Already a PT member? Log In

Log In

or


Don't have an account? Sign Up

Forgot Password

To reset your password just enter the email address you registered with and we'll send you a link to access a new password.


Already a PT member? Log In

Don't have an account? Sign Up

  • Tax

    Income Tax and spouse question

    Hello everybody Smile

    I am new here and would be very grateful for your advise please .

    I would like to let my wife manage my property which I let .

    She is not working at the moment .

    The aim is to reduce the income tax paid on this property, baring in mind this the only buy to let i have and its on my sole name .

    My question is , how much wages should I set for her to manage the property and conduct any refurbishments managements ? I am not sure about that as i don't want to set cretin amount that could be seen unreasonable buy the tax man .

    Do i also need to set a company or register her as self employed ?

    What is  the easiest way to do it please ?

    Your help would be highly appreciated Smile

    Many thanks

    0
    0

    If you are self employed you can put your wife down as an employee and pay her a wage, this will reduce your tax, if you pay her under the threshold your wife will not pay tax or stamp. Or if this is not possible your wife could act as a management company but this will mean she will be self employed, there are pros and cons with this, your wife will be able to claim expenses such as part of the house bills if she works from the house, car expences eg  any petrol used for any thing to do with the property IE traveling for viewings, collecting items for the property etc but because there is only one property these claims would be minimal. The main cons are the fact she is now self employed and will need to submit accounts, however because of the amount of money she will make she will be able to do and submit these accounts herself

    0
    0

    Hi malcom1961,

    Thank you for your reply . I am really grateful to you .

    I am not employed and this is the only income we have at the moment and do my self tax assessment on line .

    Which option would be better in this case ?

    Thank you Smile



    0
    0

    The true answer requires more knowledge of both your circumstances. Ideally you want to equalise income between you both. Different ways of doing that. Some better than others.

    1
    0

    Chartered Accountant, Tax Advisor and Mortgage broker

    (and BTL portfolio owner)

    stuart@johnsonsca.com

    02039077022

    Thank you very much for your advise . I do really appreciate it.

    Neither me nor my wife is employed for the time being and its been the case for more than a year . We are solely relying on the income of that property which is about 1350 PCM Gross less the mortgage interest rate . I do just standard self assessment on line .

    What else would you need to know if any please ?



    0
    0

    How much is the mortgage? I’m not sure if it’s worth doing anything if you have no other taxable income, you might find there is no tax to pay. And if you do have tax to pay, your spouse can charge reasonable costs to manage your property business reducing your profit and her income being within her personal allowance.

    0
    0

    Chartered Accountant, Tax Advisor and Mortgage broker

    (and BTL portfolio owner)

    stuart@johnsonsca.com

    02039077022


    The mortgage is about £250 PCM

    I am paying tax on the income right now and therefore wanted to include my wife who helps on managing it anyway to reduce or eliminate the tax that i pay on this rental. This might also set some guodence for us if we decided to buy another property but it will be in my own sole name  .


    Kindest regards



    0
    0

    I’m surprised you are paying tax.

    rent = 12 x 1350

    mortgage interest = 250 x 12

     profit = 1150 x 12 = 13200

    surely there is mileage and insurance to deduct. Say £500 (and of course repairs, TDS, fees)

    Taxable profit = 12700

    personal allowance = 11850

    property allowance = 1000

    total allowances = 12850

    what am I missing?


    0
    0

    Chartered Accountant, Tax Advisor and Mortgage broker

    (and BTL portfolio owner)

    stuart@johnsonsca.com

    02039077022


    Luckly , there was no cost last year and want to bare in mind rent increase . The mortgage interest I claimed was %75 and next year would be less till it become null .

    I am also likely to renew my mortgage which would involve product fees of about £2000 more or less, which is from my understanding is only deductible on capital growth not on income tax .

    Also , Soon we would not be claim full interest rate on our tax either as you might know .

    I am also trying to set a  stone for future if i decided to get another property .

    Kindest regards



    0
    0

    You have it all wrong. You are a basic rate tax payer so all your mortgage interest is tax deductible. And finance costs (eg interest) and those costs incidental to securing finance (fees) are all treated the same as finance costs.

    Sometimes it pays to get professional advice.

    0
    0

    Chartered Accountant, Tax Advisor and Mortgage broker

    (and BTL portfolio owner)

    stuart@johnsonsca.com

    02039077022


    I see , Thank you for attract my attention to that .

    Going back on my question to set my spouse some wages, and for forthcoming property to buy please ?


    0
    0