Landlords - working for yourself?

[Scott_D]

I know I need to speak to an accountant about this but as you guys know everything I might as well ask here first:tongue:

My old flat is rented out and is due a CP12 and boiler service. I also need to change the bathroom extract fan.

Do I/can I pay myself to do the work?

 

[oz-plumber]

Of course you can.

And while your at it, you may as well rip yourself off!

To save any later call backs - do extra work that you yourself deem to be necessary for the benefit and safety of the landlord and more importantly the tenant.

Not sure how you tax system works, but ours works along the lines that maintenance is tax deductible and upgrades are depreciated over time.

So charge yourself out at a fortune - get a big tax deduction / expense on rental income.

And don't have a split personality because you might dob yourself into the Taxman.

By the way - don't pay yourself so that you can write the bad debt off in your plumbing business - another tax deduction.

Hope this helps,

 

[lame plumber]

you can do the cp12v but why bother paying yourself, it means youll just end up paying tax on something you havent really earned !!!

 

[Scott_D]

Not sure how you tax system works, but ours works along the lines that maintenance is tax deductible and upgrades are depreciated over time.

We have something similar, may even be the same. I am not sure where the line is drawn between maintenance and upgrades e.g kitchens and bathrooms etc

 

[IDCHAPPY]

you can do the cp12v but why bother paying yourself, it means youll just end up paying tax on something you havent really earned !!!

This was always my thoughts, I won't be charging myself 2K when i go to put a new boiler in my flat :lol:

 

[kirkgas]

As a landlord, you are liable for repairs to keep the place safe, any costs you incur for this comes out the rent pot therefore paying less tax on "profit"
So if I have to pay an electrician or joiner or builder etc to do any work in any of our rentals then the sum paid out is tax deductible and the trades person sorts their own tax payment, obviously the more I pay them the more tax they pay, if I do gas or plumbing in any of the flats my accountant said I could pay myself as well but I would need to pay reasonable rates and pay the relevant tax, he decided the best result (ie at the end of the day which way gave me most cash in my pocket) was to do the gas and plumbing at material cost only, so that I didn't pay any tax on it, he said it wasn't worth the bother of paying myself to do it the. He worked out the tax due, because we run the properties through our business none of take any wage at all, all profit is divided into dividends to reduce NI and increase money into the family pot, as the main shareholder and main earner I quite often don't take a dividend, my son never takes anything, so this leaves more profit which can be spilt up between the other share holders, my mum, wife and daughter as they have less existing tax burdens, then the three of them buy me things, all perfectly legal and above board

 

[lame plumber]

As a landlord, you are liable for repairs to keep the place safe, any costs you incur for this comes out the rent pot therefore paying less tax on "profit"
So if I have to pay an electrician or joiner or builder etc to do any work in any of our rentals then the sum paid out is tax deductible and the trades person sorts their own tax payment, obviously the more I pay them the more tax they pay, if I do gas or plumbing in any of the flats my accountant said I could pay myself as well but I would need to pay reasonable rates and pay the relevant tax, he decided the best result (ie at the end of the day which way gave me most cash in my pocket) was to do the gas and plumbing at material cost only, so that I didn't pay any tax on it, he said it wasn't worth the bother of paying myself to do it the. He worked out the tax due, because we run the properties through our business none of take any wage at all, all profit is divided into dividends to reduce NI and increase money into the family pot, as the main shareholder and main earner I quite often don't take a dividend, my son never takes anything, so this leaves more profit which can be spilt up between the other share holders, my mum, wife and daughter as they have less existing tax burdens, then the three of them buy me things, all perfectly legal and above board

I said that in 1 1/4 lines

 

[kirkgas]

I said that in 1 1/4 lines

You did, but didn't explain how he could maximise his profit, I did ;-)

 

[Ray Stafford]

You did, but didn't explain how he could maximise his profit, I did ;-)

Nope. You explained how to minimise his tax.

Profit is the difference between the price charged for goods and services and the costs incurred in supplying those goods or providing that service.

What you are doing is moving the profit from a high-tax environment (your tax return) to a lower tax environment (your wife's tax return).

And I can't say I blame you - I would do the same thing assuming it is legal, but its exactly the same as Amazon, Starbucks and Vodaphone are doing - relocating profits to low tax environments to minimise tax liabilities.