Updating post from Reddit.
So i own a house with no mortgage. I was thinking of renting out but would get taxed 40 percent due to being a high rate tax payer. My wife came up with the AirBnB or Booking.com short term let idea and it's tempting. My house is next to train station, and city centre. If she opens up a Ltd company in her name and gets paid through that to let out my house would I be able to avoid paying 40 percent tax? The house itself wouldn't be transfered over to a Ltd company, just her company which would be a service, I can let's say charge her £50 to use my house so she can use it as a short term let house.
Put her on the deeds then she has 50% of the income. Your solution sounds complex.
this but she can have 100% of the income if you just make a statement as such
Do I not need to pay a stamp duty fee to do this?
Interspousal transfers are exempt from taxation.
Would i be more fd if she ever divorces me not that it's gonna happen but who knows 20 years down the line lol
Invest in a lawyer. It’s 50% hers anyway if you are married so you may as well benefit from less tax now.
Not sure if I'm correct but I thought anything you paid off or owned before marriage is harder to split. A friend of mine got a divorced and he outright owned a house before marriage, and he had a divorce and his ex wife couldn't touch his house.
Not sure why no one has mentioned this but you cant just put a house into a ltd company or pay rent into one to avoid tax. You need to sell the property to the company which will mean paying stamp duty etc.
The house would not go to Ltd company, the service will. There are Ltd companies out there that dont own property, they rent to rent
This was asked the other day and the answer was that rental income on personal property is taxable income at source so you can setup a rent collection service in ltd but you are still liable for the tax on the full amount so looks like it doesn't bring the tax bill down. People have tried it and i think there was a known company that specialised in tax avoidance this way but hmrc to my knowledge said this was a tax avoidance scheme and started to chase everyone involved for the tax that avoided.
Oh, in that case no ignore my previous statement, what your proposing is so close to tax evasion I wouldn't recommend talking to an accountant because they'll have to report you if you do.
It isn't so close to tax evasion. It is tax evasion.
That's tax evasion for the same reasons I listed here the other day: https://www.reddit.com/ls5mb9u?utm_source=share&utm_medium=android_app&utm_name=androidcss&utm_term=1&utm_content=2
Dunno why the link doesn't work. Here is the copied text:
>If I was to create a LTD company, rent the property to my LTD for £0 charge, or charge the amount of the mortgage's each month, then the LTD company rents to tenants.
That is called tax evasion my boy.
>I have read and been told conflicting advice.
No you haven't. Go ask an accountant. They will clearly tell you this isn't acceptable. What you mean is you've read conflicting things from people online that don't have a fucking clue.
HMRC is very clear on this in TSEM9160. Whoever has beneficial ownership of the asset (you) has beneficial ownership of the income (you). TSEM9170 lists how you can separate that income from ownership. A non-legitimate (insofar that you'd never rent the property to anyone else for £0) rent to your LTD company doesn't pass muster, isn't an arm's length transaction, and is clearly an attempt at evading your higher taxes.
Doing it through a LTD allows you to manage the personal income differently but opens you up to a whole lot of other costs, corp tax, accountancy fees, VAT if your turnover is high enough(unlikely on 1 property)
Get proper advice, don't trust strangers on reddit.
The LTD company has a tenancy agreement with you and it’s a sublet - that should work
The only way for that to save them money is for the rent between the owner and the LTD to be really low, well beyond market rates and that's not going to stand up to investigation.
Far safer to sell the property to the ltd and then collect money as a shareholder of the company via dividends, though this will have up front costs like SD and solicitors fees.
You left off the end of the sentence. It should read "that should work for tax evasion."
On re-reading and looking at your comments it looks like your main focus is saving the tax, as you're a higher rate tax payer.
Some of your comments are bordering on tax evasion so I'd be careful and get some proper advice before doing anything BUT one more thing to consider - if the main concern is saving tax then you dont need a ltd or any convoluted scheme/process.
Just take the income as your personal income and put ALL of it into your pension and claim the pension credit on your tax return.