buy to let income...linked to Tax/ future state pension?

Galeeno

This might be a suitable place for this question, as many people here have buy to let properties.


The main question is will their state pension rate in 5 years (the full state pension) be affected by this additional income/buy to let?

Situation of the person
- Single,
-Now working, (but in 5 years will be the state pension age, and will retire then)
-the first property they live in
-any additional property will be purchased (under a buy to let mortgage) in their name, deeds under their name, mortgage under their name ..and rented out.



If not affected now, how will the full state pension rate/amount be affected? (is, is there chance the full state pension amount a week might not be given to the person, due to the fact they have this buy to let 'additional income'

or is there a certain threshold that they have to go above in ££ in order to make the state pension NOT affected?

or for eg, make sure the rent does not produce any profit, so that it is just even...so there is no actual profit of income? (so change the rent amount -

eg, mortgage amount = £600 ...then make the rent amount = £600,

compared to , making the rent amount £700 (for a £100 profit a month = £1200 profit a year)


In other words:

If you have a few properties bought and rented, (buy to let mortgages)

and you will be in your state pension year in 5 years time, and retired from work then (now are currently working)

then can these buy to let properties, which are rented, affect your state pension amount/rate, (through / via the inland revenue/tax code?)

(as buy to let properties are seen to be a way to make an additional income. ie making money)


Would this affect the state pension amount , at the state pension age?

How would it affect the state pension ?
-added: Even through Tax? (as the rental income would be taxable)

If affected through tax, how would it affect tax?

and what would be the tax ££ thresholds, that would ensure that the amount of pension weekly would NOT be affected ? ??

Is there any way around it?, like to reduce tax..

The properties in the buy to let are in the name of the person who will be in the state pension (deeds and mortgage, as in their name), so just asking how the state pension would be affected, due to these additional incomes..

Has this happened to you? share your experience.

BobQ

The state pension is based on the contributions you made while working and has nothing to do with income tax. The more you earn however the more state second pension you accrue.

BTL income is a business you own that may or may not make a profit after expenses. You pay tax arising from your profits which are treated as income so taxed at your marginal rate.

Edit. Of course the aim is to pay as little tax as possible by claiming your expenses from BTL but if you are not making a profit its hardly worth doing. You mention the mortgage, this is not allowable as an expense only the mortgage interest.

I dare say you could create a company to own your BTL empire and minimise tax but I will let someone else explain the wisdom of that.

xylophone

You are asking the same question again and again.

The person will get the state pension for which he is eligible according to his NI contribution record. If this is in five years time he will receive it under the new single tier arrangement.
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/181237/single-tier-pension-fact-sheet.pdf

The pension will be paid without deduction of tax but if his income from all taxable sources is higher than his personal allowance then he will owe tax - this will be collected through any personal pension he might be paid through an adjustment to his tax code/and or through self assessment.

As for rental income https://www.gov.uk/renting-out-a-property/paying-tax is worth a look.

G_M

This post has general guidance on BTL, plus links to many other sources including HMRC:

http://forums.moneysavingexpert.com/showpost.php?p=41160642&postcount=12