Rental Business or Income From Property

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    Rental Business or Income From Property

    I currently own and rent out eight buy-to let properties, which I manage and maintain myself. I also own and manage two limited companies, one an SPV with three rental properties, the other owning and managing the freehold of a small block of flats of which I own one personally. I have owned roughly the same number of properties during the last few years and also occasionally buy, develop and sell properties, but only about one every 18 months or so.

    I have no other employment and do my own self-assessment tax return on which I've always declared my income as 'income from property' (and capital gains when applicable) as, in the past, I've been told by HMRC that what I do couldn't be regarded as a business and that I therefore couldn't be classed as self-employed.

    Could anyone confirm that what I was told by HMRC is (still) true and, if not, if there would be any benefits in registering as self-employed, as a sole trader?

    Any advice would be much appreciated - Thanks!

    #2
    I think your HMRC contact is right and wrong.

    I think they are wrong in saying it is not a business (there are lots of HMRC on-line documents that say it is).

    I think that what they meant to say is it is not a trade, and as such you cannot be self-employed.

    Comment


      #3
      But presumably you'd have to pay national insurance if you register as self employed?

      I was very pleased to stop paying that when I left paid employment. Tax is high enough as it is.

      Comment


        #4
        If your income comes from property investment, you are not employed and so don't neeed to be registered as self employed.
        Which, as noted, means you don't have to pay the £2.80 a week NI.

        On the other hand, paying the NI has benefits (and is probably going to be reformed).
        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


          #5
          Thanks, that makes sense. Is it not true that a lot of expenses/allowances such as travel, use of home as office, mobile phone bills etc, could be offset against taxable profit if you're self-employed, but not against 'income from property' if you're not?

          Comment


            #6
            Thanks, I will look into the NI side of things in more detail. Like you say, it looks like it will be reformed...

            Comment


              #7
              Originally posted by Ollie2000 View Post
              Thanks, that makes sense. Is it not true that a lot of expenses/allowances such as travel, use of home as office, mobile phone bills etc, could be offset against taxable profit if you're self-employed, but not against 'income from property' if you're not?
              it is not true.

              Comment


                #8
                You can still offset tbose costs against rental income withiut being self employed.

                If you are buying properties as a developer to refurb and sell on then i think the tax regime for that may be different to that for your rental income.

                Comment

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