I own and live in a house in UK with more rooms than I need, so I can rent out the surplus rooms. In UK there is a government scheme (HS223) that would allow me to earn £7500 per year tax-free, but I can probably make significantly more than that, so I am thinking about perhaps doing it another way:
Rent the rooms to my own, limited company for a nominal rent, as described in this article, then pay salaries, small enough to be tax exempt, to my wife and/or children, and claim this as expenses for the company along with other expenses. The company will generate income by subletting the rooms.
Would this be legal? And will it be better in terms of profitability?
