Wifes part time job + BTL taking her into Tax and NI?
Wifes part time job + BTL taking her into Tax and NI?
Author
Discussion

98elise

Original Poster:

32,710 posts

191 months

Tuesday 26th June 2012
quotequote all
My wife has a part time job, and now has a half share in a BTL, so this year she may well be liable for income tax (can't be sure until the tax year is up). We've notified the Tax man she needs a self assessment tax form so thats covered.

She will also go above the point where she needs to pay NI, so do we have to notify anyone else, or is that dealt with by submitting the Self Assessment?

With regard to the BTL profit, is that classes as income for NI purposes? I know its recorded in a seperate section on the tax form, but I don't think its actually treated any differently for tax purposes, so I would assume the same for NI?

Eric Mc

125,754 posts

295 months

Tuesday 26th June 2012
quotequote all
Rental income is NOT income for NI purposes.

NI is charged on EARNED income (i.e. income derived from some sort of work, such as an employment or a self employment). Rental income is classified as INVESTMENT income (i.e. income derived from an a asset, such as a bank deposit account, stocks and shares or land and buildings).

If her employment income is below the NI threshold, she will pay no - NI IN THAT JOB.

If she had another job (doesn't matter if an employment or self employment) and her income from that job is ALSO below the NI threshold, she pays no NI there either.

NI is calculated on a job by job basis, unlike Income Tax which is based on overall income from all sources.

But income from investments is never taken into account for NI purposes.

NOT paying NI may not be desireable, however. Her ultimate state pension entitlement will be based on her overall contribution record over her working life. If she wants to make VOLUNTARY contributions, she can set up Class 3 NI payments.

98elise

Original Poster:

32,710 posts

191 months

Tuesday 26th June 2012
quotequote all
Eric Mc said:
Rental income is NOT income for NI purposes.

NI is charged on EARNED income (i.e. income derived from some sort of work, such as an employment or a self employment). Rental income is classified as INVESTMENT income (i.e. income derived from an a asset, such as a bank deposit account, stocks and shares or land and buildings).

If her employment income is below the NI threshold, she will pay no - NI IN THAT JOB.

If she had another job (doesn't matter if an employment or self employment) and her income from that job is ALSO below the NI threshold, she pays no NI there either.

NI is calculated on a job by job basis, unlike Income Tax which is based on overall income from all sources.

But income from investments is never taken into account for NI purposes.

NOT paying NI may not be desireable, however. Her ultimate state pension entitlement will be based on her overall contribution record over her working life. If she wants to make VOLUNTARY contributions, she can set up Class 3 NI payments.
Many thanks, and a very good point made about voluntary contributions. She's not needed to contribute for a while as she's been bringing up our children. now they are old enough she's taken up employment again.

Eric Mc

125,754 posts

295 months

Tuesday 26th June 2012
quotequote all
Class 3 was introduced primarilly to allow stay at home wives (which was the norm at the time) to make contributions even if they had no earned income.

sumo69

2,164 posts

250 months

Tuesday 26th June 2012
quotequote all
Whilst Class 3 is useful, it doesn't proove to be needed that often as the number of years NI contributions (or deemed contributions) needed to get a full state pension was recently reduced from 30+ years to 20, so less than 50% of the working life.

David

Eric Mc

125,754 posts

295 months

Tuesday 26th June 2012
quotequote all
It depends on the individual's contribution history and their expectation of future opportunities to make the more Normal Classes 1,2 or 4 NI that will dictate whether Class 3 is appropriate or necessary.

But it is there - and far too many people aren't even aware of it.