Question:
I have 3 girls over the age of 18 and property income of over £25,000 a year. Is there a way to utilise their personnel allowance as they do help me from time to time in my properties? I was intending to form a limited company and pay them wages via the company - the company to make admin charges to me.
Arthur Weller Replies:
Yes, there is a simple way to utilise their personal allowances: gift to each one of them 1% of your property. Hopefully the maximum amount of capital gain involved will be less than the capital gains annual exemption), so you won't have to pay any capital gains tax on this. If not, do part of the gifting in one tax year, and part in the next - this way you will have two annual exemptions to reduce the capital gain.
Then draw up a written agreement between all four of you that even though the property is owned in the proportion 97:1:1:1, nevertheless the rental income is entitled to be received, and is actually being received, in the proportion 1:33:33:33, or some other proportion that you want. Then make sure that the rental income is paid by the tenant to the four bank accounts in the correct proportions (not all to your bank account as previously).
