Do I register as self employed?

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    Do I register as self employed?

    Such a simple question but one I can't find the answer to. I bought my house, Fell Pregnant so I moved into my boyfriends' property. I have started to rent mine out - I don't have a mortgage. I use the rent as my only source of income, its £650 a month and I have been advised I am entitled to universal credit. I want to put in a claim for UC so need to know do I register as self employed. If so how?

    I am a new landlord, everything else is secure and in place its just this self employment bit I don't get.
    Thank you for reading

    #2
    The short answer to your question based on the circumstances presented is that no, you do not need to register as self employed or pay NI. You should advise HMRC but will have no tax liability. The income from the property will need to be declared for the purpose of UC assessment.

    Comment


      #3
      I don't know about the UC issue.

      Landlords are Property Investors and are therefore not (technically) self employed, so normally it isn't a requirement.
      You can register as self employed on the HMRC website which, if your profit is equal to your income requires you to pay national insurance at £148.20 per annum (you pay in two installments of six months).

      There are advantages in paying NI without interuption and it's perfectly possible to pay it even if you don't have to.
      When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
      Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

      Comment


        #4
        Thank you for your replies. I have been looking but just confusing myself (I blame baby brain) What do you mean by profit?

        Comment


          #5
          Originally posted by picklebunny View Post
          Thank you for your replies. I have been looking but just confusing myself (I blame baby brain) What do you mean by profit?
          Income less any allowable expenses. Expenses should be those wholly and exclusively related to your "property business".

          Comment


            #6
            Originally posted by jpkeates View Post

            Landlords are Property Investors and are therefore not (technically) self employed
            ....Source?

            Comment


              #7
              Originally posted by boletus View Post
              ....Source?
              JPKeates is correct. Income from "property business" (as defined by HMRC) is passive and not earned. There have been cases where HMRC have asked landlords to register as self employed (which has been defended by accountants) even when it's the landlords' only source of income. Difficult to argue. however when a landlord provides "services" to tenants (e.g. laundry).

              Comment


                #8
                "In order for a property owner to be a self-employed earner, their property management activities must extend beyond those generally associated with being a landlord ......."

                https://www.gov.uk/hmrc-internal-man...anual/nim23800
                I am not a lawyer, nor am I licensed to provide any regulated advice. None of my posts should be treated as legal or financial advice.

                I do not answer questions through private messages which should be posted publicly on the forum.

                Comment


                  #9
                  Originally posted by jpkeates View Post
                  There are advantages in paying NI without interuption and it's perfectly possible to pay it even if you don't have to.
                  This is a good point. I'm only aware of JSA and state pension unless any reader can inform otherwise. A State Pension "qualifying year" may be obtained by paying 52 Class 2 contributions @ £2.85 per week. This works out at a bargain, however as the OP would be entitled to child benefit, she would get free credits anyway.

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                    #10
                    "Examples: Bob owns ten properties which are let out to students. He works full time as a landlord and is continually seeking to increase the number of properties he owns for letting. Bob is running a business for NICs purposes."

                    https://www.gov.uk/hmrc-internal-man...anual/nim23800

                    Comment


                      #11
                      It's worth remembering that this is the last year that SE (or others) can pay flat-rate C2 NICs to get basic state pension & other benefit entitlements. The alternative of voluntary C3 contributions is MUCH more expensive (about £600 pa more).

                      Comment


                        #12
                        Thanks Stuart

                        Vaguely remember this from the budget - will check it out.

                        Comment


                          #13
                          Originally posted by boletus View Post
                          "Examples: Bob owns ten properties which are let out to students. He works full time as a landlord and is continually seeking to increase the number of properties he owns for letting. Bob is running a business for NICs purposes."

                          https://www.gov.uk/hmrc-internal-man...anual/nim23800
                          That's a fair point - my answer was probably over simplistic.

                          I am registered as self employed personally, but don't think I have to be.
                          Even in the example quoted above, a key is "works full time" - and I suspect the example is (typically for HMRC advice) skewed.
                          Even 10 student properties, it's hardly likely to be "full time" - it might be Bob's only job, but there's a grey area relating to how passive is "passive"...
                          When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                          Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                          Comment

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