Can I charge fees for managing my son’s properties?Make Text Bigger
I used to own 8 rental properties in central London, which I have been managing myself for the last 35 years, even though I live abroad.
All properties, but two, have been gifted to my 25 year old son, who is studying full time in the UK. For the first time in the 2018/19 Tax year my son will be paying taxes on about 180K yearly gross rental income as s 24 starts to bite.
I was wondering if I could charge him, say 10-12% management fees/or a set wage for the next five years in order to reduce his tax burden until he assumes full management of his own properties.
I thought of this ‘services’ ( or wage ) option as it is completely true and valid and a simple way of reducing his tax burden without entering into a company formation or partnership. I will be paying increased tax on my UK rental income( on the remaining 2 properties) once this ‘services/ wage” amount is added, but it would not be as high as his.
We already have a joint business account in which all rents and expenses are going through and therefore, there is no problem for me to continue managing his properties as I have always done in the past when they were mine.
I would welcome any thoughts on this.
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