Partnership between spouses for rental income

amiramir Posts: 18MAAT, AAT Licensed Accountant
Hi everyone.
i have clients (husband & wife) who receive income from properties (residential & commercial) in a 50:50 split. currently they both are registered as self employed in their own right and I simply split the profit and declare 50:50 on SA tax return for each individual. They asked me to have their daughter as their employee but I require to set up a formal partnership to be able to set up a PAYE scheme. I am not sure if that is allowed under HMRC rules? I went through property income manuals and what i understand that for a formal partnership to exist there must be a trade or profession. Does anyone has any more knowledge on this one please? Profit split would remain as 50:50 as I do not intend to change that. any comments please?

Answers

  • MarieNoelleMarieNoelle Trusted Regular Hampshire/Surrey borderPosts: 1,461Moderator, MAAT, AAT Licensed Accountant
    Could you clarify whether the husband and wife are both sole traders in their own right, or do you consider the property business to be a "trade"?
  • amiramir Posts: 18MAAT, AAT Licensed Accountant
    Hi @MarieNoelle currently husband and wife are both sole traders in their own right and rental income has not been treated as a trade. however, now they would like their daughter to be on payroll (currently there is no paye scheme set up) and that's the point I would like to clarify because to be able to pay wages from the business, there must be a partnership in existence.
  • MarieNoelleMarieNoelle Trusted Regular Hampshire/Surrey borderPosts: 1,461Moderator, MAAT, AAT Licensed Accountant
    Thanks Amir, I am just trying to establish what the "business" is - what do wife and husband actually do and what would the daughter be paid for.
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