Using £1000 Traders Allowance to reduce my tax bill?
My two sons look after my properties whilst I am on holiday. If I make a payment to each of them of £1000 each for this service can I declare this as an expense on my tax return?
In addition can they take the money and not declare it under the trader’s allowance?
“Trading allowance
The trading allowance is a tax exemption of up to £1,000 a year for individuals with trading income from:
- Self-employment
- Casual services, for example, babysitting or gardening (helpsheet 325 has more information about other taxable income)
- Hiring personal equipment, for example, power tools
If your annual gross income from these is £1,000 or less, you do not need to tell HMRC”
As ever I am looking to reduce my tax burden, any thoughts on this would be appreciated. My tax rate on all profits is 41% so every little helps.
Jim
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Member Since February 2011 - Comments: 3454 - Articles: 286
3:53 PM, 1st August 2019, About 7 years ago
Hi Jim,
Definitely seek advice from your accountant first as if they can’t invoice you for an actual job or trade or produce receipts for a cost this may be a very hard sell to HMRC.
Member Since August 2014 - Comments: 336
9:15 AM, 4th August 2019, About 7 years ago
Jim,
This seems to me to be a very good idea, but to justify the payments they may need to be for work of value. Staying at home playing on their Xbox whilst manning a phone line would probably not be sufficient.
Next time you have some painting and decorating to do, or garden clearance, they could earn their £1000 that way, then still man the phone line whilst you are on holiday. HMRC would be much more understanding of such a tangible trade.