HMRC can’t decide if I should register as a Self Employed landlord!

HMRC can’t decide if I should register as a Self Employed landlord!

17:04 PM, 17th September 2014, About 10 years ago 16

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HMRC can't decide if I should register as a Self Employed landlord!

I manage the residential letting of 7 properties which I jointly own with my wife and/or brother and/or sister and HMRC can’t decide if I should register as a Self Employed landlord.

Currently, I am not registered as Self Employed and normally complete the Property section of my Self Assessment tax return.

However, as tax year, I will be receiving a management fee (albeit below the £5,885/year exemption threshold) I telephoned HMRC Self Employment Services to find out:

1) Whether I needed to register as Self Employed
2) How the fee should be included on my tax return

I was told that I should be registered as Self Employed in any case because I own 3 OR MORE RENTAL PROPERTIES. I said that I had never heard of this rule and understood that a Residential Landlord was deemed to be not Self Employed. The response I received was that “the rules are changing all the time”.

With regard to the management fee, I was told that this should be ADDED TO THE RENTAL INCOME and the total included as income from the business. Therefore, as this would exceed the exemption threshold, I would be liable to pay Class 2 National Insurance at £2.75 per week.

I was told that I would be sent a Self Employment form to complete regarding the rental business and this would then be assessed by specialists. I said it sounded as though the form pre-supposed that I was Self Employed, when I thought I wasn’t!

Finally, I said that my wife was currently joint owner of 2 of the rental properties BUT WAS NOT INVOLVED IN MANAGING THEM. However, I wondered if she would also need to register as Self Employed should she own or joint-own another? I was told that she WOULD need to complete the Self Employment form once she owned 3 rental properties even though she did not manage them.

Not being confident with the information I had been given, I decided to phone the HMRC Self Assessment helpline.

The person I spoke to said that she had never heard of a landlord owning 3 properties or more needing to register as Self Employed, however, just in case joint ownership affects things, she will check with the Technical Team and get back to me. I am still waiting.

As for rental property management fees, assuming that there is no requirement for me to register as Self Employed, the total should be included on my Self Assessment tax return as part of ‘Property Income’.

What do other landlords do?

Has anyone else been told they should register as Self Employed?

Is there a definitive answer?



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Ian Ringrose

15:07 PM, 2nd December 2014, About 9 years ago

If you don’t pay NI, will you get a state pension?

Roger P

9:30 AM, 3rd April 2015, About 9 years ago

I'm in a similar dilemma, after the changes to the Pension rules my 31 years contributions are now not enough for a full pension, I'm 61 so need another 4 years NI stamps for a full pension.

Having stopped work in 2008 all of my income comes from property so I need to be able to register as self employed to buy a class 2 stamp at £2.75 per week .

There seems to be threshold of the number of properties owned to qualify for self employment but a lot of confusion and "I'll ask a colleague" from HMRC

Anyone out there with the same problem?

Yvette Newbury

16:32 PM, 3rd April 2015, About 9 years ago

Yes Roger Poolman, both my husband and I wonder about this! I was making voluntary contributions for a while until they cut the amount of years from 40 to 30. Then shortly afterwards they increased them again to 35 by which time I was out of time apparently to make any further voluntary contributions - I was well and truly stitched up on that one!

We also wonder about NHS treatment as we are not in a position to pay NI contributions. There must be others affected by this too?

Ian Cognito

17:33 PM, 3rd April 2015, About 9 years ago

Further to my original post, I wrote the same letter to both HMRC NI & HMRC PAYE asking for written confirmation.

Whilst NI did not respond, PAYE's reply included the following unambiguous sentence:

"With regard to your enquiry about the management fee income, there is no need to register as Self Employed."

i.e. There is NO THRESHOLD with regard to the number of properties above which a landlord must register as self-employed.

Roger P

11:22 AM, 6th April 2015, About 9 years ago

Hmmm so which NI stamp should I be buying to keep my pension rights at their maximum as on my Self assessment return I usually fill in the income from property part and pay up
A call to HMRC looks on the cards
will let you all know how I get on

Yvette Newbury

14:52 PM, 6th April 2015, About 9 years ago

I ordered a state pension forecast and that gave me the options available in order to increase the number of years on my pension, so I followed those.

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