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  • Buy-to-Let

    Paying my wife to manage and book keep

    Hi

    I currently have a few BTL properties that are owned in my name

    My wife is a self employed hairdresser and only does a few thousand a year. She helps out doing my books and management of the properties.

    Could she invoice me for the work she does which would be tax deductible for me? Obviously she would fill it all out on her own tax return also

    Is this a common thing to do or not possible? Would you have to pay her a fair rate or could you over pay?

    I am reasonably new to BTL so constantly trying to learn

    All advice appreciated

    Thanks

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    This is a tax question not a property question.

    Your wife can provide services to your property business. The pricing should be arm’s length but you get a tax deduction against property income and she gets taxable income.

    If she had an interest in the properties then this would be harder to achieve but you could work through it to aachieve the same economic result.

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    Tax advisor and mortgage broker

    stuart@johnsonsca.com

    02039077022


    Worth noting that any of the spouse income above around £8200 pa (NI LEL threshold) is subject to NI for both parties - and if wife is doing book keeping on SE basis (sole trader) she is liable for both Class 2 and Class 4 NI contributions.

    That said a book keeper could justify around £20k pa pro rata wage - though unless you have a very large portfolio it would be challenging to justify a large number of man hours every week.

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    As yourself this question

    if you were An HMRC inspector would you belive this arrangement

    as a way of avoiding tax

    my guess is your doing it to avoid S24 and you are a higher rate tax payer

    I’m not sure it’s as easy just arranging your affairs like this

    my son carries out work for me but he is an electrician and has a lot more customers than me

    i think for it to work she would need to be carrying on a book keeping service to others as part of her self employment

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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.


    You could also look at the Marriage Tax Allowance. You might be able to backdate this to previous tax years. Have a look at https://www.moneysavingexpert.com/family/marriage-tax-allowance/.

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