Using £1000 Traders Allowance to reduce my tax bill?

by Readers Question

13:00 PM, 1st August 2019
About 11 months ago

Using £1000 Traders Allowance to reduce my tax bill?

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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



Comments

Neil Patterson

15:53 PM, 1st August 2019
About 11 months 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.

Jessie Jones

9:15 AM, 4th August 2019
About 11 months 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.


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