Clarification on rental loss and NI contribution

Dear Sir I would like to clarify reporting loss against rental income and NI contribution. I have a rental income of around 3K pounds for 2023/2024. Before the tenants moved in, I have spent more than 5K to repair the houses which I believe is eligible to claim tax deductible allowance. The rental income is my sole income, so I assume the 3K income could be exempted for taxation with my personal tax allowance of 12570 . Under this situation, can I carry forward the total 5K expenditure for the next fiscal year or I can only carry forward 2K loss (5k - 3k) and my personal tax allowance is to be wasted? Also, are expenditures involving taking away old gas fire (advised by gas engineer as dangerous and not energy efficiency) considered repairing / maintenance and tax deductible? I have three rental properties, but I am not running a business, nor am I buying new properties to rent out now. Am I required to make NI contribution? If so, should I make class 2 contribution only (as suggested in the HMRC page below: You have to pay Class 2 National Insurance if your profits are more than £12,570 a year and what you do counts as running a business, for example if all the following apply: being a landlord is your main job you rent out more than one property you’re buying new properties to rent out) Or I have to make both class 2 and class 4 NI contribution? Appreciate your advise and clarification. Thank you

Hi,

As you would be declaring the income under the rental income section of the return and not the self employed section, no NI is due on any profit that you make. You do not meet all the criteria mentioned in order to be classed as a business for NI. Expenses incurred in the tax year must be used against any rental income that you receive and it is then only the balance that can be carried forward even if this means you do nut use your personal allowances. The removal of the gas fire is allowed as this is seen as maintence/repairs.

Thank you.

Thank you for your reply. How about new sockets which tenants request? They want new sockets to facilitate their appliances. Does this job count as repairs or improvement? How about putting chimney cowl on chimney which tenants request to stop birds and draft from coming from the chimney? Does this work consider as repair or improvement? Tenants also request gravels to be out in the garden to stop weeds. Is this considered as repair or improvement? I also bought a dehumidifier for their use as they complained about damp in one of the rooms. Does the expenses of purchasing the dehumidifier tax deductible? Thank you.

Hi
Thank you for your question.
Sockets, if tenants requested sockets as there was a shortage which meant main appliances could not be used and was a determining factor in the tenant renting the property, then this may be considered as a revenue expense, however, if the property already has an acceptable amount and was only considered after the lease has begun, then unfortunately, this can be seen as an improvement where additional rental income can be claimed as an outcome in the future.
In terms of installation of gravel, although weeds may be present at the property, it is not necessary to rent out the property, so could be classed as a capital expense as the asset can do the same job if the gravel were not installed as per BIM46920.
Chimney Cowl, yes this may be claimed, as potentially any birds nesting may prevent the property being rented by tenants and stops any further damage to the property.
Finally, the purchase of the dehumidifier, yes as this is a necessary purchase in order to rent the property out at a certain standard and remove damp from the property, as long as it is used wholly and exclusively for the rental property as found in PIM2010. 

Dear Sir, I am a foreigner with a small unit in UK. Q1 - I understand the first £1000 of my income from property rental is tax free according to www.gov.uk (property you personally own). Does this mean this is the first £1000 after allowable expenses? Q2 - If my taxable income is less than £1000, do I still need to pay tax and submit self assessment? My gross rental is less than £8000.00. Please advise, Thanks

Hi,
 

Thank you for your question  you cannot claim both the £1000 property income allowance  and expenses you need to decide which is more beneficial to you. See : Check if you need to send a Self Assessment tax return    will tell you whether you need to complete a tax return  . Thank you.

Dear Sir I have hired a letting agent to manage the rental property for a few months. During this period, the letting agent is responsible to collect the rent and paid me the rent after deducting their fee. When I fill in the tax return, should I just fill in the amount I received from the letting agent as profit or I have to fill in the total amount (including the fee collected by the agent even though I didn't receive that amount) and then deduct that fee as as expenses? I have also hired a few trademen to do repairing and maintenance works, but those trademen after paying them didn't send me the invoice/recipt as agreed even though I kept chasing theme. I did keep the bank transfer record and our black and white conversation as a proof. Under this situation, am I able to include the expenses in my tax return? Appreciate your advice.

Hi,
 

Thank you for your questions. You should declare the total rents payable and claim the agent fees as a deduction. A deduction for repairs & maintenance can be claimed without an invoice as long as they qulaify for relief. More information can be found in the Property Income Manual @ : PIM - Property Income Manual  .  Thank you.