BTL Allowable Expenses
Discussion
As I got busier at work and travelling overseas, I decided I’d pay someone £50/month for each of my 2 rentals to manage the admin, e.g. dealing with tenants, insurance, gas safety checks, repairs and maintenance etc.
I’m working on the basis this would be an allowable expense ? It’s significantly less than an agency would charge as it’s less than 5% of the rent.
The last point, and perhaps where it might muddy the waters somewhat, is that the someone also happens to be my Mum.
Any thoughts?
I’m working on the basis this would be an allowable expense ? It’s significantly less than an agency would charge as it’s less than 5% of the rent.
The last point, and perhaps where it might muddy the waters somewhat, is that the someone also happens to be my Mum.
Any thoughts?
I'm no expert on this but would have thought that it is indeed an allowable expense. I would guess you would need some formal paperwork, such as an invoice - pretty easy to prepare using Word or even handwritten.
However, if the expense is allowable for you it would be taxable income for your Mum. If she's a non-taxpayer then that's probably no great problem but if not then any gain for you could possibly be neutralised. Also there could be some requirement for you to pay her net, deduct tax via PAYE etc, etc. Could be more trouble than its worth.
There are people who post on here who know all about this sort of thing so hopefully someone more knowledgeable will pick this up soon!
However, if the expense is allowable for you it would be taxable income for your Mum. If she's a non-taxpayer then that's probably no great problem but if not then any gain for you could possibly be neutralised. Also there could be some requirement for you to pay her net, deduct tax via PAYE etc, etc. Could be more trouble than its worth.
There are people who post on here who know all about this sort of thing so hopefully someone more knowledgeable will pick this up soon!
No, not cash and she does genuinely get the money - I set up a standing order so I didn’t have to remember to pay her.
She doesn’t provide me with an invoice but could easily. Can’t prove what she does as it’s admin/calls - her contact details are listed in the most recent contract as the contact point.
She’s a non tax-payer so makes no difference to her taxable earnings/status......she’s not an employee as the houses aren’t in a limited company, just owned by me....
She doesn’t provide me with an invoice but could easily. Can’t prove what she does as it’s admin/calls - her contact details are listed in the most recent contract as the contact point.
She’s a non tax-payer so makes no difference to her taxable earnings/status......she’s not an employee as the houses aren’t in a limited company, just owned by me....
uuf361 said:
No, not cash and she does genuinely get the money - I set up a standing order so I didn’t have to remember to pay her.
She doesn’t provide me with an invoice but could easily. Can’t prove what she does as it’s admin/calls - her contact details are listed in the most recent contract as the contact point.
She’s a non tax-payer so makes no difference to her taxable earnings/status......she’s not an employee as the houses aren’t in a limited company, just owned by me....
A standing order is cash. It doesn’t matter if you leave it in plastic Easter eggs and have her hunt for it. You’re paying her undeclared, untaxed income and wondering about tax efficiency.She doesn’t provide me with an invoice but could easily. Can’t prove what she does as it’s admin/calls - her contact details are listed in the most recent contract as the contact point.
She’s a non tax-payer so makes no difference to her taxable earnings/status......she’s not an employee as the houses aren’t in a limited company, just owned by me....
The point is, you need to document it, and she needs to declare it as income, for it to be an allowable expense.
Then correct application of relevant laws & policies on her part, as she’s essentially a contractor.
More trouble than it’s worth, I’d have thought.
I see no problem with you paying your mum to look after the property. Get her to give you an invoice for the work she does and as far as you are concerned, the cost is fully allowable as a cost against your rental profits.
Regarding your mum, yes, she now has "self employed" income as a "property manager" and technically she should register for self assessment to allow her to declare it to HMRC.
HOWEVER, if her total income from this activity (less HER allowable business costs) when combined with her pension income still leaves her below the personal tax allowance (currently £11,850), then she would not e required to contact HMRC regarding self assessment as she would have no taxes arising.
She should, of course, monitor the situation to make sure that in any given tax year, her total income from all sources does not exceed the personal tax threshold.
Regarding your mum, yes, she now has "self employed" income as a "property manager" and technically she should register for self assessment to allow her to declare it to HMRC.
HOWEVER, if her total income from this activity (less HER allowable business costs) when combined with her pension income still leaves her below the personal tax allowance (currently £11,850), then she would not e required to contact HMRC regarding self assessment as she would have no taxes arising.
She should, of course, monitor the situation to make sure that in any given tax year, her total income from all sources does not exceed the personal tax threshold.
Eric Mc said:
I see no problem with you paying your mum to look after the property. Get her to give you an invoice for the work she does and as far as you are concerned, the cost is fully allowable as a cost against your rental profits.
Regarding your mum, yes, she now has "self employed" income as a "property manager" and technically she should register for self assessment to allow her to declare it to HMRC.
HOWEVER, if her total income from this activity (less HER allowable business costs) when combined with her pension income still leaves her below the personal tax allowance (currently £11,850), then she would not e required to contact HMRC regarding self assessment as she would have no taxes arising.
She should, of course, monitor the situation to make sure that in any given tax year, her total income from all sources does not exceed the personal tax threshold.
Thanks Eric. Total pensions under £5k/year so not an issue.Regarding your mum, yes, she now has "self employed" income as a "property manager" and technically she should register for self assessment to allow her to declare it to HMRC.
HOWEVER, if her total income from this activity (less HER allowable business costs) when combined with her pension income still leaves her below the personal tax allowance (currently £11,850), then she would not e required to contact HMRC regarding self assessment as she would have no taxes arising.
She should, of course, monitor the situation to make sure that in any given tax year, her total income from all sources does not exceed the personal tax threshold.
Maybe I’ll just buy her lots of flowers and wine instead and not worry about the tax bens.
uuf361 said:
As I got busier at work and travelling overseas, I decided I’d pay someone £50/month for each of my 2 rentals to manage the admin, e.g. dealing with tenants, insurance, gas safety checks, repairs and maintenance etc.
I’m working on the basis this would be an allowable expense ? It’s significantly less than an agency would charge as it’s less than 5% of the rent.
The last point, and perhaps where it might muddy the waters somewhat, is that the someone also happens to be my Mum.
Any thoughts?
I think that's the key - your mum is not regulated the agency is. less then 5% £50 ! why palm this off on your mum - has she nothing better to do? If you are letting your property then do it correctly.I’m working on the basis this would be an allowable expense ? It’s significantly less than an agency would charge as it’s less than 5% of the rent.
The last point, and perhaps where it might muddy the waters somewhat, is that the someone also happens to be my Mum.
Any thoughts?
It may be argued that your mum should be member of a redress body and TPO as she is now your agent which has the liability and obligations that imposes.
Are you living overseas? Declared to HMRC, NRL? Mum/tenants have to declare your income?
How did you let the property and when? Did you use an agent? Have you got all the paperwork uptodate?
Edited by superlightr on Friday 22 June 13:56
Edited by superlightr on Friday 22 June 13:58
uuf361 said:
Thanks Eric. Total pensions under £5k/year so not an issue.
Maybe I’ll just buy her lots of flowers and wine instead and not worry about the tax bens.
Hold on - it's an easy way to save £480 a year if you’re a 40% tax rate payer. You could take your mum out for a slap up meal, quaffing champagne etc. with that! Plus she’ll still be getting the £1,200...Maybe I’ll just buy her lots of flowers and wine instead and not worry about the tax bens.
uuf361 said:
Don’t think any of it is relevant at all, but:
I live in the UK (I used to live overseas)
I’ve been renting for some years
All income declared to HMRC
All contracts up to date
My Mother is retired....
Sounds like you’re all good to go, with the proviso that your mother needs to follow the applicable tax laws - which Eric has suggested may be nil, depending on her circumstances.I live in the UK (I used to live overseas)
I’ve been renting for some years
All income declared to HMRC
All contracts up to date
My Mother is retired....
Edited by uuf361 on Friday 22 June 20:46
oop north said:
As described she doesn’t have any tax issues. It’s much easier to get to a national insurance issue (roughly £6k is he trigger for class 2 nic and roughly £8k for class 4) but at £100 per month she would be nowhere near. You need a formal invoice, though
If she’s hit state pension age, would she still be paying NI?I’m not sure OP confirmed what type of pension income is being received.
Pay her 999 a year not 1200 and she doesn't need to do anything with the tax man.
And do the invoices for her and just stick them in an envelope and job jobbed .
https://www.gov.uk/guidance/tax-free-allowances-on...
(Ignore the property bit, thats just a coincidence)
You might need to disown her to break the family tie but I'd probably chance it.
And do the invoices for her and just stick them in an envelope and job jobbed .
https://www.gov.uk/guidance/tax-free-allowances-on...
(Ignore the property bit, thats just a coincidence)
You might need to disown her to break the family tie but I'd probably chance it.
Edited by Heres Johnny on Sunday 24th June 10:04
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