Wife - Employee or Partner ?

On_the_Money

Hi everyone,

I am hoping some of you experts can guide me in the right direction.

We have 2 properties, our PPR and the second that we have been letting for nearly a year. My query is whether I declare my wife as an employee or as a partner (50/50). My wife does takes care of the admin side of the business but does also part own the property.

I would be grateful if you could clarify whether my statements below are correct and/or offer any alternative solutions.

Firstly, can I declare my wife as an employee even though see does part own the property or do I have to declare her as a business partner?


Declared as an Employee :-
The profit would be reduced by paying her a wage of £5035 and on this amount she would not be taxed. But then does this would mean, if/when we come to sell this property I would not be able to use her capital Gains Tax allowance?

Declared as a Partner :-
The profit is split allowing for 2 Personal Income Tax allowances but she would now have to register with HMRC and we would have to prepare a second set of accounts and complete a SA for her.


This is all quite new to me and I would like to start off on the right foot, so any other advise/suggestions would be much appreciated, thank you.

dori2o

Are you simply renting out the property?

If so then there is no partnership or employment status, if your wife is a half owner of the property, then she should be declaring 50% of the turnover and expenses i.e. profit, on the Land and Property pages of a tax return.

Cook_County

dori2o wrote: »

Are you simply renting out the property?

If so then there is no partnership or employment status, if your wife is a half owner of the property, then she should be declaring 50% of the turnover and expenses i.e. profit, on the Land and Property pages of a tax return.

She may not necessarily be a half owner, but she certainly should file her own return.

On_the_Money

Thank you both for your replies.