Self Employed - Property Management

Self Employed - Property Management

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I rent four properties, which are owned jointly with my wife. Due to problems surrounding letting agents I decided to take over the management myself. To manage four properties takes up alot of time,

“I advertise properties, prepare tenancy agreements/ carry out inventories/ submit deposits with recognised tenancy deposit schemes, liaise with contractors to carry out  repairs and maintenance/ carry out repairs and maintenance myself if cost effective, arrange annual gas safety certificates, inspect properties at regular intervals, collect rents, general admin including transferring utility bills/council tax etc. Serve eviction notices when required. Provide my own 24/7 mobile number for emergencies, basically I now do every aspect an agent would do and more”

HMRC are querying that managing my own properties is not a trade, and therefore I should not be self employed.  It is only treated as a trade when the landlord remains in occupation of the property and provides services substantially beyond those normally provided by a landlord. This will be the case, for example, where the activity consists of providing bed and breakfast, or running a hotel or guesthouse. See PIM4300.  where the activity consists of providing bed and breakfast, or running a hotel or guesthouse. See PIM4300.

Under my self employed accounts I declare 15% of the annual income, and offset expenses like my mobile, van costs as I have to travel a lot to the properties. Purchse of computer etc. If I were to remove the self employed accounts could I still claim all these expenses under the letting accounts?

any advice would be great?

Replies (2)

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By cparker87
17th Sep 2012 22:11

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Yes.

Why are you charging yourself? This is a false construct as you cannot enter into a contract with yourself.

If there was a Management Company dealing with it (which you direct) it might suffice. Benefits are outweighed by the admin burden though I expect.

What were you trying to achieve?

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By eastangliantaxadvisor
18th Sep 2012 08:36

I am a bit puzzled as to what you are delcaring.

 

You will be taxed on the net rents i.e after expenses etc. SO I am unsure as to why you are declaring only 15%.

 

the question as to if it is self employed income (income from a trade) or property income is something that is subject to a lot of case law and guidance. Given your invovlement it may be there is an argurment it is a propoerty trade.

 

You will be able to deduct expenses that have been incurred in maanging the property that meet the requirments of being incurred wholly and exclusively for business purposes, and if part of the expense e.g mobile meets this requirment then this proportion can be deducted.

 

 

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