Can I just let my management company keep all rental income so that I break even on personal tax liability?
Is it possible to just let my management company keep all the rental income and then pay myself enough to cover mortgage and expenses, so that I break even for self-assessment purposes and pay corporation tax only, and then buy further properties through the company going toward?

Arthur Weller replies:
It is certainly possible to set up a management company to manage personally owned property, and charge the individual landlord a management fee. This fee can be any amount. However, HMRC will not accept a fee in excess of the normal, commercial rate. This is probably in the region of 10–15%. So the company can charge the individual whatever amount is agreed between the parties, but only 10–15% will be allowed to reduce the individual’s taxable income. Furthermore, HMRC would probably also tax the company’s profits in full.


This question was first printed in Tax Insider in April 2017.

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