Self employed or not as landlord/lady?

[sober]

I have a property jointly owned with my dad, someone tells me that this will be considered as partnership. And so i have to register as self-emplyed for NI contributions for class 2 as well as class 4. Is that right? My understanding was that I only needed to fill land and property income in self assessment as well as my main employment income. Does anyone have a view on this?

Thanks

[Taxation Solutions]

sober

Rental income is classed as investment income not self-employed income and therefore a trading partnership does not exist. You are responsible for each declaring your beneficial share of the rental profit/losses.

[Tax Accountant]

Yes, it is exactly as stated by Taxation solutions above.

Ramnik

[sober]

Thank you Taxation Solutions and Ramnik
Just one other caveat:
The bank that lent us the money to buy the property, insisted that we made a formal partnership to receive the loan and pay rental to it to cover the repayments. The property was bought in our joint names anyway (since partnerships cannot own anything).

Would this still be the case?

Thanks
Sober

[Tax Accountant]

Thank you Taxation Solutions and Ramnik
Just one other caveat:
The bank that lent us the money to buy the property, insisted that we made a formal partnership to receive the loan and pay rental to it to cover the repayments. The property was bought in our joint names anyway (since partnerships cannot own anything).

Would this still be the case?

Thanks
Sober

I believe that the bank would have required you to open a joint current account to service the joint loan and this is quite normal. However, this is not the same as forming a partnership as you have misinterpreted.

To confirm, replies above still stand.

Ramnik

[sober]

Thanks again Ramnik.

However, odd as it may seem, I haven't misinterpreted it; the partnership doesn't own the house, but has the loan.

Both the loan and current account ARE indeed in the name of a partnership - and this partnership for loan purposes has its own name - the property that we bought is however in OUR joint names, and is not mortgaged by the bank as security (as it was not mortgageable at the time ) - we had used our existing house as security for the loan instead. IR have confirmed that the loan will qualify for tax purposes against the rental income. I was just not sure about the NI situation since someone raised the point recently, as mentioned in my first post.

Best regards
Sober

[Tax Accountant]

It is difficult to give full advice without knowing the full circumstances under which the loan is apparently in the name of a partnership, which I assume is a trading partnership between the same persons who are the joint-owners of the investment property.

I suggest that the partnership accountant, if there is one, is best placed to answer this.

Ramnik