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bigduckontax, Accountant
Category: Tax
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Hi. I earn a small wage (around £5500 per annum) and consequently

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Hi. I earn a small wage (around £5500 per annum) and consequently do not pay any tax or NI. I have recently bought a small house with some inheritance money and am letting it at a modest rent (£400 per month) to my daughter. I am happy to reduce the rent to bring me under the tax threshold. Do I need to do self assessment, and is my wage from a company included in this. I need to pay NI contributions as I still have a few more years to pay. I have also had a student loan which will need repaying. I am 51 yrs old and married and a homeowner. Thanks for any advice. Amanda

Hello Amanda, I'm Keith and happy to help you with your question.


You must self assess as you have income not declared through PAYE. It is your responsibility, you cannot just wait for HMRC to send you a form. You must also inform your tax office that you are renting out your house and the probable income therefrom. It is subject to Income Tax and is classed as a business and may attract NI contributions at Classes 2 and 4. I compute your total income to be of the order of just over the Personal Allowance. The simple way to cover this is to either reduce the rent or to ask your tax office to reduce your tax code number so the small amount of tax needed to meet your liability is deducted form your wages.


You need to have an annual income of over 21K before you need to repay any student loan. Interest does, however, accrue on un-paid loans.

bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4943
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Thank you for your support.

One tiny amendment to my reply; paragraph 2 line 4, delete 'form' insert 'from!'
Customer: replied 4 years ago.

Can I just do assessment on line or would I be better to get accountant to sort me out initially. I am also concerned that I am paying the right NI. I have not paid for the last 5 years or so as was unemployed and it was not paid for me as I didn't declare unemployed (due to depression). I lived off husbands income. (About £31,000) I have then been full time degree student so again not paying NI.

My Husband has also inherited small property which he intends to let out. He is on PAYE. His and my properties are currently in our individual names. Any further advice would be great thanks

Oh dear, you really should have declared yourself as unemployed through the Job Centre then you would have received NI credits for you period of unemployment. As a full time student attending a University or College you are exempt from NI contributions, but they get you in the end by saying that you have not enough years in for a full State Pension. Fortunately you don't have to make contributions over the age of about 60, but if you do then they count and the number of qualifying years needed have been reduced recently.

You are sent a notice my the NI authorities annually asking if you wish to top up your contributions so have a look at those.

You can self assess on line. I personally won't touch any HMRC on line system with a barge pole if I can possibly avoid so doing. By the way any maintenance costs incurred in your house during rental periods is allowable against rental for tax purposes. Any improvements eg a new kitchen are added to the original purchase price to reduce the gain on ultimate sale for Capital Gains Tax assessment.

By all means use a local, trusted accountant initially, but it will cost at least a hundred quid plus VAT (not tax deductible) and you cannot use me as Just Answer rules prohibit me from touting for business!
Customer: replied 4 years ago.

Hi. Thanks for answer. I was thinking that I would probably need to pay voluntary NI contributions. When I looked on web site, I wasn't sure what as I am employed part time even though I don't pay any through that. I don't think that I have too many years left to pay for state pension, as received the basic previously when either with young children or working. I think I will use an accountant just to set me off in the right direction. Hate paying the £100 + but it might be beneficial in the long run to know it is correct. Thanks again Amanda

NI can be a hidden nightmare which strikes when you come to claim your State Pension, by which time there is nothing you can do about it! I paid off my age 18 to when I started work at 18 and a half arrears in the 60s and was tipped off about receiving contribution credits when registered for unemployment benefits when I claimed for a short time over 20 years ago, cheers for the UB40.

Blame Lloyd George, he started the whole caper off in the early years of the last century with modest pensions for people over 80, very rare birds then! My mother told me that he was known as the Welsh Devil or the Wizard of Wales depending upon your political viewpoint! She inclined to Liberal views.
My name is Sam I hope you do not mind me adding a small correction, Rental income does not attract National Insurance, as is not trade income (which does attract Class 2 and Class 4 National Insurance consideration) so first ask for a state pension statement - link here - establish whether your total contributions are less than the required 30 years,(and you may hve had children and as a child benefit claimnet had credits added in to this period of time, or claimed income support or unemployed benefit and had credits added in - then see whether 1) the shortfall might be achieved between now and state pension age - or 2) voluntary contributions are a consideration now. ThanksSam