2015/16 Tax Year no tax due if less than £15,600 income including Savings income.

TCA

buglawton wrote: »

Would dividends form part of income? See 1st paragraph above.

Is it a grey area when it comes to paying 10% NI on income if rental income exceeds £8000 pa? Insofar that HMRC refuses to publish a clear statement, yes.

I'm unsure on the dividends as taxable income question in respect of the new rules, but the rules on NI haven't changed and are exactly as I stated in my previous post. In 2015/16 class 4 NI is payable at 9% on profits between £8,060 and £42,385. No grey areas as far as that goes.

https://www.gov.uk/government/publications/rates-and-allowances-national-insurance-contributions/rates-and-allowances-national-insurance-contributions#class-2-and-class-4-national-insurance-self-employed

Check the HMRC webpage below. Click the question mark at "any other income" and you'll see property rental income mentioned:

http://www.hmrc.gov.uk/tools/r85/r85-2015.htm

kingrulzuk

If one has a NS&I Driect saver with £1.3million in account. Total Interest pre year £14,300. with no other income.

Does one have to pay tax on the Interest?

jem16

kingrulzuk wrote: »

If one has a NS&I Driect saver with £1.3million in account. Total Interest pre year £14,300. with no other income.

Does one have to pay tax on the Interest?

No one does not.

One does, however, have to question why on earth one would have £1.3m sitting in an account earning a measly 1.1% interest.

kingrulzuk

Yes its just 1.10% and its my father in law who has the account and my wife looks after it.

System

I'm ashamed to say I missed this earlier (thence my username) and thanks to all you more observant wise folk have now registered most of my savings for R85/ gross interest online- the only 'slow coach' is Shawbrook Bank, who want to send me a R85 form by post...

brianh

Tried to download form R85 from HMCR and it says form now invalid.
Surely it is still valid for 2015/6?

buglawton

TCA wrote: »

I'm unsure on the dividends as taxable income question in respect of the new rules, but the rules on NI haven't changed and are exactly as I stated in my previous post. In 2015/16 class 4 NI is payable at 9% on profits between £8,060 and £42,385. No grey areas as far as that goes.

https://www.gov.uk/government/publications/rates-and-allowances-national-insurance-contributions/rates-and-allowances-national-insurance-contributions#class-2-and-class-4-national-insurance-self-employed

Check the HMRC webpage below. Click the question mark at "any other income" and you'll see property rental income mentioned:

http://www.hmrc.gov.uk/tools/r85/r85-2015.htm

The forms you mention above do mention rental income for tax purposes but nothing about NI.

The grey areas still is, do you pay NI on rental income or not?
When does rental income become self-employment as opposed to investment income?

I've never been able to get past the confusion expressed in this thread:
http://www.landlordzone.co.uk/forums/showthread.php?62083-National-Insurance-Contributions-Class-2-NICs

molerat

brianh wrote: »

Tried to download form R85 from HMCR and it says form now invalid.
Surely it is still valid for 2015/6?

https://www.gov.uk/government/publications/income-tax-get-interest-without-tax-taken-off-r85-from-6-april-2015

TCA

buglawton wrote: »

When does rental income become self-employment as opposed to investment income?

I see what you're asking now. I was answering with regard to the theme of this read, in that either form of income is taxable and counts towards the £15,600 figure.

The fine line between operating BTL as a trading business as opposed to having an investment, would seem to depend on individual circumstances and might therefore require an individual judgement by HMRC. From what I can gather it depends on how "active" or "passive" the property owner is with regard to his/her property or properties. If someone owns one property and does nothing other than collect rent, then HMRC seem happy that this is an investment and the rent is taxed as personal income at the individual's marginal tax rate, so it's not trading and therefore no need to register as self-employed, pay national insurance etc...

Where an owner owns say a building containing 10 apartments, then the workload becomes more re administration, maintenance etc.., and this would be more like a trading business and therefore NI would be payable on the profits, although you can claim deductions for maintenance costs, mortgage interest etc...

I think you're right in that there's no definitive guidelines from HMRC, but for the discussion on this thread, I believe either route counts as income with regard to the £15,600 number.

buglawton

Well eventually I will be submitting a tax return for the person whose tax agent I am. The income will as it happens be somewhere in the £12-15k range and include rental income. So it will be interesting to find out how the auto calculation goes when I fill the online Self Assessment form in.

NI is important - I see it as a tax by another name so this will be a test of the "No tax for the 1st £15,600" idea.