A husband and wife own a number of properties jointly . The husband is a self employed accountant not registered for vat as years are advancing and business slowing. Is there any reason why the husband can not charge fees to the joint rental account to apportion costs for his staff and charge for his time used in running and accounting for the rental operation. All the charges being relevant ,reasonable wholly exclusively etc.
This being agreeable the fees etc would become part of the overall fee income for the accounting business and be liable to tax and class 4 nic , if the inclusion of these fees were to push profits to be taxed at higher rates then pension contributions would also be available for pension tax relief at the highest rate operating ?
Replies (18)
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The premise of your question is flawed. You don't get "tax relief" on pension contributions. You get tax deferral. If you have discovered a way of getting 'tax relief' let me know immediately.
"Clueless" Really.? Until ACT was abolished during the Brown Terror pension funds were tax exempt. Now they have no more internal atx efficiency that any other collective investment fund.The only 'tax efficiency' remaining is for a single premium to offset higher rate tax when it arises which will be taxed at the standard rate when the fund is decumulated.
If I can reduce my net tax liability - reducing it at 45% today with some of the investment being taxed at 0%, and some of it at 20%, in 20 years' time - I consider that to be a tax relief.
Indeed, if I can reduce my tax laibility at 20% today, and have the return taxed at a mix of 0% and 20% tomorrow, that to me is a relief from tax.
100% agree. So let's meet in the middle and call it 'partial tax relief'. But the current HMG scam of forcing employers to corral employees into Auto Enrolement pensions that will simply by abated against their benefits when they retire for the 'target audience' abuses the term 'relief' Different argument I know. But relevant.
I think this sounds ok if done on a commercial basis.
I trust you have done the sums to make sure there is a benefit in doing this.
I think this sounds ok if done on a commercial basis.
Presumably this only works if his accountancy practice is a separate legal entity? Otherwise he is just paying himself.
Perhaps I was being two subtle. I was not referring to deferral of the premium being set against income. But to the fact that 75% of the emerging benefits, whether in the form of an annuity, or drawdown will be taxed at the client's then marginal rate. That is the 'tax deferral' to which I eluded. I see nothing "strange" in stating that.Is that worth all the paraphernalia of tax codes etc for 20%? Bung the money into an investment trust and get it tax free at the end.