My client has a property rental business. (furnished property) She pays her daughter £100 per month for the property administration : liaising with tenants, collecting rent etc. Can these payments be deducted as an allowable expense, and in what category it falls? my client does not operate a PAYE scheme. Thank you.
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It's treated as though it's a business so fine. As long as daughter has no other job then no requirement to operate PAYE at £100 pm.
I normally enter in 'other services' box ( not got a return in front of me) but just be consistent.
Each to his own
I would use Box 28.
Based on the description given by the OP I myself would put them in box 27 (management fees), since they seem to be services for the landlord rather than the tenants.
Thank you. Last year i also put in box 27 as management fees, but i am in doubt now as it says in the guidance that box 28 is 'management fees paid to an agent', which is not the case, as it is just payments made to her daughter, although for the same service. I've read somewhere that if you make payments to a family member you have to operate a PAYE scheme. her daughter is a student and does not have any employment income.
Don't understand
" As long as daughter has no other job then no requirement to operate PAYE at £100 pm."
I'm sure there is no PAYE requirement and the cost is allowable (assuming substantive services are being provided). I don't understand why other jobs would affect any PAYE obligation, however.
Scheme
I don't understand why other jobs would affect any PAYE obligation, however.
I think what was meant is that if the daughter has another salaried employment then paying her a wage would require a PAYE/RTI scheme to be setup.
Wholly and exclusively springs to mind as possible issue
Is the £100 a month reasonable when looking at rent collected? A rate of say 10% would not be amiss, maybe even 12-13%, beyond that it would look somewhat non commercial which might, given the connected parties, lead to it being challenged.
Are the daughters "fingerprints" apparent re the operation of the business, i.e. can it be evidenced that she does perform the function she is being paid to perform?
The rented property is 100 miles away from the landlords home. So instead of traveling to the property when there is a need she is paying her daughter monthly, who lives close to rented property, as it is much more cost efficient. £100 a month is less then 10% of rent received, so it can be considered reasonable.