Can I charge fees for managing my son’s properties?

Can I charge fees for managing my son’s properties?

8:56 AM, 23rd July 2018, About 6 years ago 11

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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.

Thalia


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Comments

Reluctant Landlord

8:40 AM, 11th April 2022, About 2 years ago

Reply to the comment left by Gary Nock at 24/07/2018 - 08:16
'However be aware that if you let the properties for him and fall into the category of a Letting Agent then you will need to be legally compliant to do that. This includes membership of a redress scheme, and from next April client money protection which also means professional indemnity insurance'

Does this apply even if that person doesn't charge the owner for managing them/looking after the properties on their behalf?

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