Self employed

[joe90]

3 hours ago, pocster said:

guess we wait until June and find out !

it depends if my tenants are still paid and they pay me?, they are good tenants and I want them to stay. I am sure we can come to an agreement.

[Pocster]

7 minutes ago, joe90 said:

it depends if my tenants are still paid and they pay me?, they are good tenants and I want them to stay. I am sure we can come to an agreement.

Couldn’t agree more !! 

[K78]

I think a huge problem is people on low basic wages with high commission. 
 

My mate has just had to furlough all his staff (recruitment company). They all drive cars they could never afford (£750 per month pcp) and have huge mortgages or rent cc apartments. 
 

As a nation most have been living above their means for years. My generation don’t know any different. 

[Thedreamer]

On 28/03/2020 at 10:46, pocster said:

 

Can you explain how 'income' from property is devised ? i.e. being a 'landlord' ( which anyone can be simply from renting out a property' and being a self employed landlord ?)

I know HMRC treat these differently one as an investment ( so no help where SE or not) and one as a trade/business . What 'defines' the difference?.

Obviously if you work full time and have 1 property let through an agent that looks clearly like an investment.

 

Simple example, ignoring tenancy agreements etc
 

If you tried to argue that rental of property was trading, then the first question would be however many customers (stay in your property) to you trade with over a period of time? If you have one customer over a long period of time that would not be a trading, but a different tenant/customer each week because of the number of transactions and different customers, this now starts to feel more like trading.

Further proper stuff from the HMRC below.

 

From the HMRC

 

There is no further statutory help. As a result the courts have established for themselves what amounts to a ‘trade’, or ‘trading’, and their decisions provide guidance when the point is in dispute.

 

‘Broadly, ‘trade’ can be taken to refer to operations of a commercial kind by which the trader provides to customers for reward some kind of goods or services. The extension of the definition to ‘ventures in the nature of trade’ allows for the inclusion of isolated or speculative transactions, although not all such transactions will be within the definition.’

 

The badges of trade is typically how a decision is made whether trading exists.

 

https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim20205

 

[Thedreamer]

On 27/03/2020 at 12:45, Thedreamer said:

My wife has some self employed income, but the bulk comes from wages from tourism sector.

 

At moment we don't get any help, as the tourist season usually starts in March.

 

Some self employed people who are able to continue to work will be laughing all the way to the bank as they will get up to £7,500 for nothing.

 

As an accountant I can see what the government has done but too many folk have fallen through the cracks particularly in our area.

 

 

 

 

 

 

 

 

Coming back to this.

 

Looks like my wife qualifies for both.

 

Self employed income was the majority of income for 18/19 and the government decided to included in the detailed guidance last year's earnings for calculating employment income under the job retention scheme. Won't be a massive sum for either but all will help.

 

 

[Pocster]

14 minutes ago, Thedreamer said:

 

Simple example, ignoring tenancy agreements etc
 

If you tried to argue that rental of property was trading, then the first question would be however many customers (stay in your property) to you trade with over a period of time? If you have one customer over a long period of time that would not be a trading, but a different tenant/customer each week because of the number of transactions and different customers, this now starts to feel more like trading.

Further proper stuff from the HMRC below.

 

From the HMRC

 

There is no further statutory help. As a result the courts have established for themselves what amounts to a ‘trade’, or ‘trading’, and their decisions provide guidance when the point is in dispute.

 

‘Broadly, ‘trade’ can be taken to refer to operations of a commercial kind by which the trader provides to customers for reward some kind of goods or services. The extension of the definition to ‘ventures in the nature of trade’ allows for the inclusion of isolated or speculative transactions, although not all such transactions will be within the definition.’

 

The badges of trade is typically how a decision is made whether trading exists.

 

https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim20205

 

Thanks . So is there so magic line at which tenant turn over becomes ‘trade ‘ . I can turn over 4/5 tenants a month - is that ‘trade ‘ ??? . Appreciate it’s all rather vague and grey . What concerns me more is when is a property an ‘investment’ And when is it a ‘living’ i.e a job ( dare I say it a trade ) . 

[Pocster]

Is a letting agent a trade ?

Just wondering .....

[Thedreamer]

6 minutes ago, pocster said:

Thanks . So is there so magic line at which tenant turn over becomes ‘trade ‘ . I can turn over 4/5 tenants a month - is that ‘trade ‘ ??? . Appreciate it’s all rather vague and grey . What concerns me more is when is a property an ‘investment’ And when is it a ‘living’ i.e a job ( dare I say it a trade ) . 

 

As stated above no definition of trading. But in this case probably decided by a tenancy agreement. 

[Thedreamer]

5 minutes ago, pocster said:

Is a letting agent a trade ?

Just wondering .....

 

Yes as they would be providing a service to a number of landlords as customers. In addition each month in providing these services would constitute a new transaction. 

[Pocster]

1 minute ago, Thedreamer said:

 

Yes as they would be providing a service to a number of landlords as customers. In addition each month in providing these services would constitute a new transaction. 

But couldn’t a landlord be providing services to tenants each month ;,the same thing ?

What I mean is a landlord with no agent is effectively the agent I.e does the job they would - surely a landlord can in certain circumstances constitute a trade ??

[Thedreamer]

1 minute ago, pocster said:

But couldn’t a landlord be providing services to tenants each month ;,the same thing ?

What I mean is a landlord with no agent is effectively the agent I.e does the job they would - surely a landlord can in certain circumstances constitute a trade ??

 

No because the rental of property is not a service. 

Also the use of property over the long term but on a rolling short term contract would not be seen as such by the HMRC.

[Pocster]

13 minutes ago, Thedreamer said:

 

No because the rental of property is not a service. 

Also the use of property over the long term but on a rolling short term contract would not be seen as such by the HMRC.

Sorry I’m confused 

An agent will rent a property so is therefore not a service ?

 

HMRC website states a few examples of what constitutes a ‘self employed landlord ‘ which equates to being active with aspects of management I.e a business . As opposed to having 100 properties and simply giving them to an agent would be viewed as an investment. It’s all very murky !!

Edited March 29, 2020 by pocster

[Pocster]

I wonder how HMRC will decide who gets financial help for SE . Do they just ignore anyone that states ‘landlord’ or will it have a bit more depth ??

[ProDave]

Since the SE grant is by invitation, perhaps any of us that get such an invitation should post here to say so.

 

I have already had an email telling me about the scheme. Have you @pocster ?

[Thedreamer]

2 minutes ago, pocster said:

Sorry I’m confused 

An agent will rent a property so is therefore not a service ?

 

HMRC website states a few examples of what constitutes a ‘self employed landlord ‘ which equates to being active with aspects of management I.e a business . As opposed to having 100 properties and simply giving them to an agent would be viewed as an investment. It’s all very murky !!

 

The agent is renting on behalf of the tentant. The rent they collect won't be their income but held to be paid to the landlord less a management fee (this bit is the trading service)

 

Yes you could be a self employed landlord but this will still be a property income.

 

The HMRC will decide whether you qualify as land and property income sits within a different box on your self assessment. 

 

 

[Pocster]

5 minutes ago, ProDave said:

Since the SE grant is by invitation, perhaps any of us that get such an invitation should post here to say so.

 

I have already had an email telling me about the scheme. Have you @pocster ?

No nothing !!!! You’re in the money @ProDave !! . But yes anything I get ( or most probably don't get ) I’ll post .

Edited March 29, 2020 by pocster

[Pocster]

1 minute ago, Thedreamer said:

 

The agent is renting on behalf of the tentant. The rent they collect won't be their income but held to be paid to the landlord less a management fee (this bit is the trading service)

 

Yes you could be a self employed landlord but this will still be a property income.

 

The HMRC will decide whether you qualify as land and property income sits within a different box on your self assessment. 

 

 

Presume you meant agent is renting on behalf of the landlord .

The rent I collect won’t be my income once I pay all the bills .I’m not trying to be argumentative- just struggling to see the difference .

[Thedreamer]

Just now, pocster said:

No nothing !!!! Your in the money @ProDave !! . But yes anything I get ( or most probably don't get ) I’ll post .

 

Do you have an accountant? Might be worth dropping them an email?

 

That's pretty much what I have been doing all last week. 

 

 

[Pocster]

7 minutes ago, pocster said:

No nothing !!!! You’re in the money @ProDave !! . But yes anything I get ( or most probably don't get ) I’ll post .

But you might be pulling my leg a bit ...

[Pocster]

2 minutes ago, Thedreamer said:

 

Do you have an accountant? Might be worth dropping them an email?

 

That's pretty much what I have been doing all last week. 

 

 

Yeah . I’ve asked them . I wonder if you don’t get the golden ticket if ( via your accountant ) you are allowed to object ! 

[Thedreamer]

5 minutes ago, pocster said:

Presume you meant agent is renting on behalf of the landlord .

The rent I collect won’t be my income once I pay all the bills .I’m not trying to be argumentative- just struggling to see the difference .

 

Just out of interest if your the landlord how are you being affected? Presumably your tenants might benefit and then be able to pay?

 

One area you might benefit from is the delay on the payment in account in July, if you have a bit of money set aside for this you might be able to use this now, but you will need re save it again as the liability will still be payable.

[Thedreamer]

For this scheme it's the HMRC that will contact you. 

 

As accountants it's been an unusual week as usually we get a while to inform clients how changes will affect them. The last few weeks we've had information on schemes but have been waiting on more detailed guidance. 

 

In our office we have been working with a skeleton crew, one employee on each floor.

 

[Ferdinand]

1 hour ago, Thedreamer said:

 

Just out of interest if your the landlord how are you being affected?

 

I won't speculate on @pocster's position, but it is different for every landlord.

 

My business is a mixture of single family lets and a couple of student houses. My tenants tend to stay long term (if they settle in 2-3 years up to 10+ years).

 

The only couple I have lost quickly recently was back in 2018 when they realised after a few months that I was right when I told them at the start that they could afford a house and were silly to plan to rent long term, and bought somewhere and moved out. It was amusing but expensive that at the start - even though they had 2 family members in the street and there had been an advert on the house window whilst it was being renovated - they still went through the agent rather than direct, and that cost us about £500 each. Need some work on the feet-on-the-ground front ?.

 

I have a couple of Ts who may be under threat of layoff, but should be covered by the 80% as employees though they will lose overtime. Another has lost a pension topup income from renting out a holiday caravan - site fees have been paid, and the whole summer's bookings have evaporated and the site has been locked down. For another online translation income seems to have stopped. But on the other side students are funded per year, and the finance has not been withdrawn, and my students for 2020-2021 year were all signed up with full guarantors by Nov 2019. I have offered reductions if people really struggle. I also have a couple who are on Housing Benefit, such as it is. I will be scoped out of the scheme by the income cap in all probability.

 

OTOH an HMO rented to professionals by the room such as contractors risks them losing their income by being terminated, and the HMO is liable for Council Tax (unlike my student houses). The Council Tax liability on such a house could be between about £1000 and £8000 pa, as some Councils treat each individual room as a separate Band A dwelling for Council Tax purposes.

 

But I am aware of a senior professional renting in the Lake District who is now desperately looking for somewhere else, as they have a short term let in a Holiday House whilst  waiting for a big developer to complete their new house. But the developer has frozen the whole project, and the LL they are with now has cold feet about a long-term rental. And there is someone vulnerable in the house so they are advised to be socially disconnected for 3 months. And the whole market has largely stopped.

 

But there are LLs where Ts have run away now offering free housing for the emergency to NHS Staff who are becoming persona non grata with housemates, or wanting to be away from families for safety reasons.

 

I have a good friend who has split from girlfriend, and is now stuck in the same house as there is nowhere to go.

 

None of it is easy, and the large majority of LLs who only have a single rental might struggle to take the hit, or just sell up afterwards. That will push the market faster in a corporate direction, which is what the politicians think they want - but has all sorts of consequences they do not consider.

 

Ferdinand

 

 

Edited March 29, 2020 by Ferdinand

[Pocster]

10 hours ago, Thedreamer said:

 

Just out of interest if your the landlord how are you being affected? Presumably your tenants might benefit and then be able to pay?

 

One area you might benefit from is the delay on the payment in account in July, if you have a bit of money set aside for this you might be able to use this now, but you will need re save it again as the liability will still be payable.

7 tenants have no income now . Though they should get 80% of their salary ; whether they pay rent at that point who knows . 2 tenants were self employed but less than 3 year accounts - so won’t qualify. UC won’t cover the rent . 1 just up and left . I can’t rent any empty rooms ( currently 2 ) . Add that all up and there’s a fair bit of risk / lack of income.

[Thedreamer]

3 hours ago, pocster said:

7 tenants have no income now . Though they should get 80% of their salary ; whether they pay rent at that point who knows . 2 tenants were self employed but less than 3 year accounts - so won’t qualify. UC won’t cover the rent . 1 just up and left . I can’t rent any empty rooms ( currently 2 ) . Add that all up and there’s a fair bit of risk / lack of income.

 

The 7 tenants should receive theirs wages as normal from their employer, it's the employer who will have the time delay in reclaiming. I would imagine although employees may be earning less, there day to day living costs should also be less (commuting, motoring, disposal income on nights out etc). 

 

My understanding for the self employed scheme was that you needed just to have the 18/19 year filed (assuming the other criteria are met) so they should be eligible if they have filed just 18/19. Depending upon their circumstances they may qualify for the government backed loan, grant, or be able to delay a VAT/Self assessment payment for example which might free up some cash for the rent before being able to reclaim the government funds in June.

 

The tenant that just left are you able to claim from his deposit. I'm not familiar with tenancy agreements.

 

I wouldn't panic just yet, worth having a calm chat with each tenant to see what help they are able to access. 

 

As mentioned before I would have a chat with your accountant to see if they have any further suggestions for you personally.