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Letting agent fees and management fees are deductible.
Common types of expenses you can deduct if you pay for them yourself are:
Those expenses are used to reduce the profit from the letting an you just pay tax on the profit.
If being a landlord is your main job then you have to pay Class 2 National Insurance if your profits are over £5,965 a year and what you do counts as running a business but you also need to be doing the following too:
If not then it is not a business.
You don’t pay National Insurance if you’re not running a business - even if you do work like arranging repairs, advertising for tenants and arranging tenancy agreements.
Yes, that is correct.
If all the following apply:
You have to pay Class 2 National Insurance if your profits are over £5,965 a year and what you do counts as running a business, eg if all the above applies.
If your profits are under £5,965, you can make voluntary Class 2 National Insurance payments, eg to make sure you get the full State Pension.
As far as class I only listed the profit amount for class 2, Class 4 if your profits are £8,060 or more a year.
If you have numerous properties then that is fine, even if bought prior to.
Landlord being your main work would look at where your (if any) other income derives from, how much time you are spending on letting vs other work, pension in one or the other, and if you are doing all the work yourself.
In your example with teaching, how much time are you required to spend on each? The one that requires more of your time and you receive more income (profits after expenses) would be your main job.
I trust this has been helpful.
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The profit is subject to the NI not all gross (before expenses).
Teaching is your main job in my interpretation in both your examples.
The point is in having more than one not really when you acquired. Business would mean you have more than one property you let.
You pay Class 4 rate of 9% on profits between £8,060 and £43,000 then you would pay a rate of 2% on profits over £43,000.
If your taxable profits are above the lower Class 4 profit limit (£8,060 for 2016-17 and 2015-16) you will pay Class 4 contributions of 9% on profits over this limit. You pay Class 4 National Insurance together with your income tax – usually due by 31 January and 31 July each tax year. If profits are high (over £43,000 in 2016-17; £42,385 in 2015-16) then the rate of Class 4 National Insurance falls to 2% on profits over this higher limit.
You don’t pay National Insurance if you’re not running a business - even if you do work like arranging repairs, advertising for tenants and arranging tenancy agreements. You are not required to.
You came back after I had left and your rating was received. Your original question was about the allowed deduction for letting fee and management. I was not requested to calculate your tax.
I responded to all your additional follow ups and added questions that were past the original .
I advised you would not pay NI based on your activity.
Calculating your tax is a different question and should be posted as a new and separate question.
I'd like a final answer to the above questions plusAnd finally regarding these three clauses-being a landlord is your main job-you rent out more than one property-you’re buying new properties to rent out (adding to your portfolio of properties)Do I have to pay NI contributions in the following scenarios?Scenario WLandlord is my main job, I rent out two properties but I am not buying any other properties.Scenario XLandlord is not my main job, I rent out two properties and not buying any other properties.NOScenario YLandlord is my main job but I only rent out 1 property andNOScenario ZLandlord is my main job, I rent out 3 properties and am actively buying a fourth
Scenario WLandlord is my main job, I rent out two properties but I am not buying any other properties.
Tax calculations scenarios A B C and D would be a new question.
That is totally separate form your original post about can you deduct.
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.
You will be liable for Income Tax (IT) on the following income:
A. 25K + 5K - 11K [Personal allowance] = 19K @ 20% is 3.8K tax payable.
C. 33K - 11K = 22K @ 20% is 4.4K tax payable.
D. 53K - 11K = 42K: 32K @ 20% = 6.4K and 10K @ 40% = 4K: total 10.4K due.
I hope that this gives you the information you require regarding IT.
Letting property does not attract National Insurance contributions.
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