Management charges in a UK investment company

Management charges in a UK investment company

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A property company holds three properties. It is owned by the sole director.

The director pays himself a salary for collecting rents, general admin like organising finance, organising repairs etc etc.

Is the salary deductible from the Shedule A income for the company or is it a management charge?

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By johngroganjga
31st Jan 2014 09:31

Yes it should be an allowable expense, provided that the amount paid reasonably corresponds with the arm's length price for the services he provides.  It's allowable because the salary is a  management expense.

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By KarenCCarr
31st Jan 2014 09:47

Thanks for taking the time to reply John.

I was wondering if it allowable against Schedule A income or is it a management expense.

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By johngroganjga
31st Jan 2014 09:53

Don't understand the distinction you are trying to make, but that is probably my problem.  I'll put it another way.  It will be allowable as one of the management expenses that property companies are able to deduct from their rental income for tax purposes.

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By KarenCCarr
31st Jan 2014 10:08

Sorry I have not been clearer.

Is the salary an management charge of a investment company or a rental expense.

I realise that, for tax, it makes no difference as both are relievable, but was wondering where it went on the tax comp,

 

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By johngroganjga
31st Jan 2014 11:20

If it's necessary to make a distinction it must be a management expense.

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