Paying my Wife a Property Management Fee

PierremontQuaker03

Hi,
I currently have 1 BTL property - from December last year.
I am just in the 40% tax bracket - so the BTL profit I will be subject to paying 40% tax - I am obviously going to put thru as many expenses as I can to reduce the profit, which I will research on (any links much appreciated).
I own the BTL property i.e my name is on the mortgage and the deeds - my wife isn't yet on either - I am planning to do this next time we re-mortgage.
However, as I am working full time she deals with the admin side and tenants - so I was thinking of "paying" her an annual fee for this process for her time etc as she does not earn enough to pay tax.
I realise I will have to fill in a self assessment for her to account for this income, however, she has been on maternity allowance in this period (Dec13 to 1stApr14) - would her declaring this income affect that fact that she was being paid Maternity Allowance at the same time? She was being paid maternity allowance as she, at the time, was not earning over £130 per week by her employer for the relevant period when applying for statutory maternity pay.
Does this make sense to anyone!

trailingspouse

Not sure why 'paying' is in inverted commas. If she really does the work, then really pay her.

LittleMissGiggles123

I'm pretty sure it will affect her maternity allowance because she would be classed as working, therefore no longer on maternity leave.


However, when on maternity leave you are allowed 10 days Keep in Touch days, which does not affect your maternity leave.


I'm going based on the limited knowledge I have on the subject so please check before taking my word for it.


Aside from that, I don't know if there would be a problem paying her, apart from maybe affecting any means tested benefits if you claim any.


Hope you get your answers.

PierremontQuaker03

trailingspouse wrote: »

Not sure why 'paying' is in inverted commas. If she really does the work, then really pay her.

Well.....she doesn't do the work really, but I want to make sure I use her tax free allowance....come on everybody does it!

zygurat789

PierremontQuaker03 wrote: »

Well.....she doesn't do the work really, but I want to make sure I use her tax free allowance....come on everybody does it!

No no, that's not the attitude.
She DOES the work and is seen to be paid for it.Her wages must be less than the class 1 limit £5772 though you might get away with £7956.
You notify the taxman who will adjust her code number so that there is no need for you to become an "employer" and be subject to RTI.

If you are trying to make sure yiou don't miss out on anything did you get the free £720 from the taxman into your wife's pension?

purdyoaten

zygurat789 wrote: »

No no, that's not the attitude.
She DOES the work and is seen to be paid for it.Her wages must be less than the class 1 limit £5772 though you might get away with £7956.
You notify the taxman who will adjust her code number so that there is no need for you to become an "employer" and be subject to RTI.

If you are trying to make sure yiou don't miss out on anything did you get the free £720 from the taxman into your wife's pension?

I also note that the op plans to pay his wife an 'annual fee' as opposed to a wage and probably looking, therefore, to avoid operating PAYE altogether - an even more hazardous route in my opinion.

The easiest route is to place the property in joint names - now that is what most do!!!

trailingspouse

You say in your OP that she does admin and deals with tenants. That sounds like work to me - so I'm confused.

Either she doesn't do any work for the business, in which case you shouldn't be paying her. Or she works for the business, in which case you should be paying her. It's all very simple really.

Or maybe you want her to do the work for nothing, and then pay her nothing but make it look like you're paying her to reduce your tax liability.

I'm out.

zygurat789

trailingspouse wrote: »

You say in your OP that she does admin and deals with tenants. That sounds like work to me - so I'm confused.

Either she doesn't do any work for the business, in which case you shouldn't be paying her. Or she works for the business, in which case you should be paying her. It's all very simple really.

Or maybe you want her to do the work for nothing, and then pay her nothing but make it look like you're paying her to reduce your tax liability.

I'm out.

I'm sorry I thought it was quite obvios what was meant.

zygurat789

purdyoaten wrote: »

I also note that the op plans to pay his wife an 'annual fee' as opposed to a wage and probably looking, therefore, to avoid operating PAYE altogether - an even more hazardous route in my opinion.

The easiest route is to place the property in joint names - now that is what most do!!!

I have seen HMRC do what I described in the post before yours. No PAYE implications, wife's salary dealt with in tax code on main job.
The OP is planning to go the route you suggested but hey why pay two lots of expensive legal fees when it can all be done at a stroke when there is a remortgage.

grey_gym_sock

zygurat789 wrote: »

No no, that's not the attitude.
She DOES the work and is seen to be paid for it.Her wages must be less than the class 1 limit £5772 though you might get away with £7956.

well, if you used an agent, they might charge 15% of gross rent. so if you pay her something in that area, fair enough. at lot more ,e.g. 50% of rent, isn't going to be defensible.

purdyoaten

zygurat789 wrote: »

I have seen HMRC do what I described in the post before yours. No PAYE implications, wife's salary dealt with in tax code on main job.
The OP is planning to go the route you suggested but hey why pay two lots of expensive legal fees when it can all be done at a stroke when there is a remortgage.

I was agreeing with you! It just appears that the op is intent on paying an 'annual fee', not a salary - no regular payments but an adjustment as it suits at the end of the year!