I have a letting property portfolio and expenses are allowable against my rental income.  If I were to act as a letting agent for someone else how would my income and expenditure be assessed?  I also work part time with PAYE employment.  Should I set up a limited company to deal with the letting side or is there an income level I should achieve first?

If you were to act as a letting agent for someone else this would be treated as a self employed trade. It is worth considering using a limited company if a) your total income goes above the sum of your personal allowance and the basic rate band, currently (2012-3) £8,105 + £34,370 = £42,475, i.e. you hit higher rate tax; and b) you don't mind leaving income above the higher rate threshold, in the company. But if you are going to withdraw it from the company - you are probably not going to be any better off. However from a National Insurance perspective you definitely save money operating through a limited company. However running a limited company can be a bit of a hassle.