14:12 PM, 16th January 2017, About 5 years ago 8
As I understand it, rental profits are considered “unearned income” and therefore that money cannot attract tax relief if put into a pension.
Most of my properties have an agent who finds tenants, collects rent and carries out inventories etc but, as everyone on here will realise, there is much else to be done in managing a small portfolio from insurance to repairs to accounts etc.
It occurred to me that perhaps my Limited Company could be contracted to carry out those tasks – either on an hourly or fixed rate. This would have the effect of reducing my personal rental profit but providing a small income/profit into the Limited Company which otherwise has a very small revenue at the present Those company profits could then be put into a pension.
Do others have experience of this or have you put similar arrangements in place. If the company did or did not perform this service for properties I do not own personally would that help to pass any scrutiny by HMRC?
Any thoughts on reasonable rates – I probably put 5-6 hours/week on average into it.
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