Financing a full time dream...

Jul 27, 2019
11
6
South Coast
Funster No
62,739
MH
Don't own one yet
Exp
I'm a newbie, but planning to buy my MoHo this autumn/winter.
Looking at the HMRC website - passive income (eg from rental,properties) would make you self-employed. If earning £12.5k you’d pay no income tax and about £500 in NI (£150 plus 9% of everything over about £8,600)
If self-employed you can make NI voluntary contributions which could be much less than £500 to ensure there are no gaps in your NI history or to ensure you achieve sufficient qualifying years for the state pension at retirement. To get a record of your qualifying years, go to GOV Gateway website.
 
Jul 27, 2019
11
6
South Coast
Funster No
62,739
MH
Don't own one yet
Exp
I'm a newbie, but planning to buy my MoHo this autumn/winter.
Okay. That's not a problem. Give me a couple of hours to figure out how to attach the file and for me to tidy-up the workbook and remove my data - I'll keep the food data in. Please note this is a simple workbook for full-timers with no other commitments ashore (no house, no car), those funsters with property and/or still working will need to adapt to their circumstances. I'll upload later this morning.
Hi Glas Robin. At the risk of baring my soul, please find attached the Excel Workbook for your and others' use. I've not removed my data so that this can be a benchmark to consider and adapt to your circumstances accordingly. There is also a 'Shoestring' table, but this is more sustainable than I'm prepared to bear. I have 'locked' many of the cells to protect the formulae, but have highlighted (light blue) those cells where you can enter text or data. If you want to over-ride this protection, you can unlock the worksheets or workbook using funster as the password. The 'Refit Plan' worksheet is completely un-locked. Hope this helps, but please all note I am a single person leading a mostly off-grid sustainable lifestyle.
 

Attachments

Silver-Fox

LIFE MEMBER
Sep 5, 2014
5,060
8,405
Cheltenham Spa
Funster No
33,201
MH
Rapido
Exp
im a not so newbie
If self-employed you can make NI voluntary contributions which could be much less than £500 to ensure there are no gaps in your NI history or to ensure you achieve sufficient qualifying years for the state pension at retirement. To get a record of your qualifying years, go to GOV Gateway website.

You may find gaps in payment history.
I have always paid NI from starting work either paye or se.

I have gaps in my history, no idea why but can only be down to the revenue department 🙄
 
Aug 31, 2014
113
52
Surrey
Funster No
33,119
MH
Coach built
Exp
4th year
If you go the Ltd company route and pay yourselves a salary each month you will probably need an accountant for payroll etc, something else to consider in your budgeting 😎
 
Oct 12, 2009
2,493
2,572
SW London, Poland and all Europe
Funster No
8,876
MH
A Class N+B Arto 69GL
Exp
Since 2009
Looking at the HMRC website - passive income (eg from rental,properties) would make you self-employed. If earning £12.5k you’d pay no income tax and about £500 in NI (£150 plus 9% of everything over about £8,600)
My opinion is that those NI rules may apply to professional landlords who manage several properties, but not to an owner who lets out their sole property when absent, e.g. holiday or working overseas.

Geoff
 
May 23, 2018
324
564
Leicestershire
Funster No
54,044
MH
Carthago Compact 138
If you transfer to a limited company, you must then pay second home SDLT on the transfer. I can’t remember the exact formula, but I worked out it would cost about 9k for a £200k house. If you need a mortgage, you must get a commercial one, and persuade a lender to lend to a new company with no credit history. If this is possible anymore (pre 2008 it was. I doubt it now) then they will certainly require a directors guarantee, which makes a mockery of the ltd part!

Property has a tax class all of its own, but the whole class 2 national insurance at £2 a week isn’t the whole story, there’s a percentage owed as well. Don’t ask me what, I always do my tax return in September, so it whole year since I wrestled with the Flaming Corridors of Hades, I’m, sorry, the Government Gateway. Doing the tax return is fine. Submitting it is a complete and utter pain in the proverbial.
 
May 14, 2013
57
50
Pevensey Bay
Funster No
26,004
MH
Carthago Compactline
Exp
Yonks
Being a landlord of domestic property is no longer worth it in my view. Mortgage payments are no longer tax deductible and many other areas that were have also been removed. We have been offloading domestic property and are moving into the commercial market. Much better all round as you hold 3-6 months advance rent and if the tenant stops paying you can enter the property and take it back after only 3 weeks, unlike domestic which can take months and cost thousands. There are much better tax advantages in commercial property too. Our first commercial property is yielding 10% net!
 
OP
Glas Robin
Jun 2, 2018
193
302
Beautiful North Wales border
Funster No
54,207
MH
Carado T449
Exp
Newbies
Ok, so dreaming has turned into active financial planning, costing and budget work.

Daft question I know, because it depends on characteristics of house/area, etc....

However, is there a rough rule of thumb between house value and rental potential? US sites I’ve looked at suggest rental income in the range of 0.8% to 1.1% per month is realistic.

Anyone aware of anything vaguely similar for UK properties? I’m thinking I can release a pot of £250kto300k to buy a property to let/as a UK base. It could be anywhere between Shropshire and Devon as we have family times in those areas.
 

Silver-Fox

LIFE MEMBER
Sep 5, 2014
5,060
8,405
Cheltenham Spa
Funster No
33,201
MH
Rapido
Exp
im a not so newbie
Here’s a question for the property moguls.

Is it better to have three cheaper properties to rent that are mortgage free.
Or one property at the same value of the three mortgage free.
 
OP
Glas Robin
Jun 2, 2018
193
302
Beautiful North Wales border
Funster No
54,207
MH
Carado T449
Exp
Newbies
I’m getting close to needing to put this in front on a qualified financial advisor, however one further general question if I may.

If I have an investment pot of say £300k in stocks/shares and it generates 3% growth per annum - say £9k, but I draw down (by selling units) £20k per year as income, I presume I still only pay income tax on the £9k since it is profit, not the full £20k which includes some of the original capital?

The original £300k pot will already have been taxed as salary or via CGT on property sale.
 
May 14, 2013
57
50
Pevensey Bay
Funster No
26,004
MH
Carthago Compactline
Exp
Yonks
Here’s a question for the property moguls.

Is it better to have three cheaper properties to rent that are mortgage free.
Or one property at the same value of the three mortgage free.
Having 3 properties would spread the risk but as I have said previously in my opinion commercial property has a greater return and more tax advantageous.
 

Silver-Fox

LIFE MEMBER
Sep 5, 2014
5,060
8,405
Cheltenham Spa
Funster No
33,201
MH
Rapido
Exp
im a not so newbie
Having 3 properties would spread the risk but as I have said previously in my opinion commercial property has a greater return and more tax advantageous.
I appreciate having three would spread risk, just wondered if the return was better 😊

I think commercial has always been a safer bet has it not?
 
Aug 31, 2014
113
52
Surrey
Funster No
33,119
MH
Coach built
Exp
4th year
On our travels we have met a couple that do Holiday Lets in Cornwall & Devon, seems a better return than a 1 year lease, bit more hassle though, but there is management companies out there. However in Cornwall now it helps to be living there if your buying a property because they are trying to stop this.
Another option we have thought is mobile home parks, however there is a high management fee & some parks state that you have to buy a new one every 10 or so years! Someone is making a lot of money on these.
Personally I think that property & rentals have lost their growth, I think if I had £300k I would invest in ISAs & bonds for a safer option.
 
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