Property Letting and National Insurance


J

Jon

My father recently passed away and I have inherited his former house
mortgage free. Rather than sell it in a depressed market it is my intention
to rent it out on an assured short hold tenancy.
The letting agency says it should bring in around £450 pcm as rental income,
which after any expenses I do not think is bad.
I work for an firm as a salaried employee paying national insurance via paye
and what I wish to know is would I also have to pay self employed national
insurance contributions because of this rental income and if so how much?
As you can tell I am new to all this type of thing.
Jon
 
P

Peter Saxton

My father recently passed away and I have inherited his former house
mortgage free. Rather than sell it in a depressed market it is my intention
to rent it out on an assured short hold tenancy.
The letting agency says it should bring in around £450 pcm as rental income,
which after any expenses I do not think is bad.
I work for an firm as a salaried employee paying national insurance via paye
and what I wish to know is would I also have to pay self employed national
insurance contributions because of this rental income and if so how much?
As you can tell I am new to all this type of thing.
Jon
If it's not classed as a business you would not - your case wouldn't
be classed as a business.
 
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R

Ronald Raygun

Peter said:
If it's not classed as a business you would not - your case wouldn't
be classed as a business.
I think you're being a little sloppy with your nomenclature.

Of course it would be classed as a business. It's a rental business.
Accordingly, it carries a duty to keep proper accounting records, and
to report income, expenses, and profit therefrom on the appropriate
section of his tax return (if he doesn't normally get one, he would have
to let HMRC know about his rental business and they will then probably
send him one). He will have to pay income tax on the profit from this
business.

However, the word you should have used instead of "business" is
"self emploment". A property business does not count as self employment,
and therefore there would be no class 2 or 4 NI contributions payable.
 

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