Property Income Tax

Property Income Tax

11:13 AM, 13th June 2015, About 9 years ago 12

Text Size

My brother and I have for many years both been Self Employed sole traders in construction and building maintenance.

Over the last 3 years we have been concentrating more on acquiring BTL Properties and have so far built a portfolio of 14 properties which doesn’t give us much time to do any paid work, so are currently living off our rental profits. Property Income Tax

We own the properties equally as “Tenants in Common”.

My question is; can I pay my brother for working on and managing my 50% of the portfolio, and can he pay me for working on and running his 50%?

I do understand that we can’t pay ourselves for running our own share of the portfolio, but could pay an agent or spouse or anyone else that we see fit.

Thanks

Steve


Share This Article


Comments

Simon Lever - Chartered Accountant helping clients get the best returns from their properties

11:33 AM, 22nd June 2015, About 9 years ago

Have you considered setting up a limited company owned by you and your brother to maintain all of your properties. The company can charge for the maintenance of the properties, reducing the level of rental profits.
You can then each take salaries from the company up to the personal allowance level to ensure that your NI contributions are up to date for your state pension. If your rental income becomes taxable then the salaries could be reduced but I would still try to make sure some form of NI credit is obtained to maintain the pension entitlement.
If the company makes profits of more than the salaries then consider paying dividends as the tax on these is lower than salary or rental income. You could have alphabet shares so differing levels of dividends can be paid but there must be a commercial reason for the different classes of shares other than to pay differing levels of dividend.
Paying your brother to maintain your share of the properties will be seen as a sham by HMRC and they will not accept the arrangement. You have to have a different "person" being paid other than the owner of the property to get the tax deduction.

Simon Lever - Chartered Accountant helping clients get the best returns from their properties

11:59 AM, 22nd June 2015, About 9 years ago

As an addition to the above IF your wives work for the company, say in an admistration capacity, then they can also take salaries using up their personal allowances. They can also own shares to receive dividends.

The advice is generalistic and cannot be taken as specific to your circumstances. If you speak to your accountant they should be able to advise you more specifically.

Leave Comments

In order to post comments you will need to Sign In or Sign Up for a FREE Membership

or

Don't have an account? Sign Up

Landlord Tax Planning Book Now