Updating post from Reddit.

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QUESTION
Posted by liveloudlivelandlord 1 week ago
Spouse as managing agent

I rent out a flat in england and wondered if it's legal and an allowable expense tax-wise for my unmarried spouse to manage it for me. Would she need to be a sole trader / have a VAT number etc? think I've seen managing agents charge between 7-12% of rent and I'd rather pay the money to my spouse.

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Posted by PayApprehensive6181 1 week ago

There are laws around being an agent. So probably not worth it. They'd need to be part of property redress scheme. ICO registered. Property ombudsman scheme. Insurance etc etc.

Also have to do self assessment and other things. Basically they'd be running a business and it comes with responsibilities

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Posted by happykal 1 week ago

Interesting, thank you.

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Posted by mousecatcher4 1 week ago

She would obviously have to pay tax on the income she gets from this. Generally if she has unused tax allowances or pays at a lower rate there are better ways to achieve this such as splitting the property ownership. For married couples the tax declaration has to be aligned exactly with the beneficial ownership but is by default 50% for joint ownership even if this is not an equal share unless the requisite forms have been submitted to HMRC.

Since you are not married what you can do is give to her 1% of the property naming her on the title and then apportioning both rent and expenses in the same ratio between you which does not necessarily have to be one percent. However this has other consequences such as when you split up if you do.

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Posted by chamanager 1 week ago

Yes this would be legal. As you say you are not married there is no formal financial link between you. Your spouse would need to fill in a self-assessment tax return and declare the commission you pay them as income and this would be subject to tax at their marginal rate. It’s unlikely you would need to register for VAT as the commission on just one flat will be well below the £85k registration threshold.

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Posted by ratscabs 1 week ago

I act as managing agent for my spouse’s property and do it for free, so there’s no tax to pay. If I charged her, then I’d be paying a substantial whack to HMRC, so jointly, our income would be less overall.

Unless you are the sort of couple who keep their money absolutely separate from each other, it doesn’t seem to make a lot of sense to me.

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Posted by happykal 1 week ago

I guess it would make sense if the person acting as an agent as unemployed. No point wasting the allowance.

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