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What is my tax position and should I form a company?

Question
I have two properties that I let out. Should I just add the rental income to my full time salary of around £42,000 (+ 18,000 (rental income) = £60,000) on the self-assessment form? Therefore approximately £15,000 will be taxable and charged at 40% = £6,000 tax leaving me £9,000; and will I have to pay National Insurance contributions (NICs) on the rental income as I put it through self-assessment? Would it be better to set up a partnership or company? Both properties are held in unequal shares (tenants in common) with my partner.

Arthur Weller replies:
You should put the £18,000 on the UK Property supplementary pages of the self-assessment return, and not just add it to your salary income. There is no NICs on this property income. If your partner is not a higher rate taxpayer there is something simple and legitimate that you can do to push more property income into the hands of your partner and overall pay less income tax. And if that idea is not suitable there is something else that you can do, again simple and legitimate, to push property income into the hands of a limited company, and consequently pay less tax overall. Speak to a tax adviser.  

Property Tax Insider This sample question and answer is taken from Property Tax Insider, a monthly UK tax saving magazine for landlords and property investors.

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