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  • Section 24 HQ

    If you have a salary, S24 is a killer!

    Depends on your gross rental income. Ideally, setup a limited company (property management) and use that to bill management fees to yourself. If say you are married and your gross rental income is 140k, you could bill yourself 10% (14k) and then pay yourself and your wife a PAYE salary out of that (£503 per month as a minimum, £702 as a maximum). This will give you both full NI credits but you pay no NI. The £14k is also a valid expense so reduces your S24 exposure. Only downside is that you have to pay an accountant to do the company accounts and payroll but mine only charges me £400 plus VAT each year so well worth while.

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    You have to be careful with the strategy your outlining

    it can work but aHMRC could challenge it if the company was only doing management for a wife or a husband

    its better if you can show you work for other landlords outside the family


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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.

    True .. and valid if you overcook it - 15% would probably be challenged by HMRC. My accountant is very good and he was very relaxed with 10%

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    I can't see the advantage of paying myself a salary only to be taxed heavily on it ? I'd consider a better use of the funds within a property management limited company to be used paying a director's pension, before corporation tax is due ?

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    What do folk with income solely from personally held property do with regard to National Insurance contributions ?

    Such folk (like myself) are not required to pay NI  If what we do counts as a business we have the option of paying class 2 contributions. Class 2 contributions are an amazing bargain. The government was planning on abolishing them this year but that has been postponed again.

    HMRC use a special definition of business for landlords and NI. See https://www.gov.uk/hmrc-internal-manuals/national-insurance-manual/nim23800

    I have done a little bit of non-landlord work recently. I hope to qualify to pay Clsss 2 contributions from that. One year's will be enough to maximise my state pension.


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    DL's numbers seem very high to me. My total income was ~£50k, almost all from rents. From that I pay about £10k in costs (including full management by letting agents) and ~£15k in interest. Leaving me about £25k before tax, about £22k after tax, That is enough for me to live on without splashing out. It is also low enugh that S24 has little effect on me.

    Actually last year I also too £5k from a pension - tax free, and paid my self a dividend from my company of £500 - also tax free though I lent it back to the company.. I also earned £500 by doing a bit of consultancy.

    After S24 was announced I stopped buying in my own name and now have three properties in my company. It has not yet paid any tax due to the purchase costs, and due to my first bad tenant (who left recently). Since I have bought new properties for the company incorporation costs have been low.  With dividend (£2kpa) repayment of director's loans for deposits, and possibly paying a director's pensiom future tax should be low. That relies on the company income being fairly low by DL's standards, but it should be high enough for me.

    I my own name I have a tot LTV for my properties of under 50%. I used 75% mortgages for the company but price rises will have reduced the overall LTV a little.

    I plan to start taking some pensions in the next FY, but I also plan to sell a former home and use the proceeds to pay down mortgages, hopefully avoiding S24 whilst increasing my income significantly.

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