Certain property business owners are liable to Class 2 NICs
Class 2 National Insurance Contributions (NICs) are currently paid at the rate of £3.05 per week by self-employed earners. A person who is liable to Income Tax on the profits arising from the receipt of property rental income will only be a self-employed earner for NICs purposes if the level of activities carried out amounts to running a business.
HMRC have recently issued clarification which states that in order for a property owner to be a self-employed earner, their property management activities must extend beyond those generally associated with being a landlord which include, but are not limited to, the following:
- undertaking or arranging for external and internal repairs;
- preparing the property between lets;
- advertising for tenants and arranging tenancy agreements;
- generally maintaining common areas in multi-occupancy properties; or
- collecting rents.
The HMRC guidance suggests that the ownership of multiple properties, actively looking to acquire further properties to let, and the letting of property being the property owner’s main occupation could be pointers towards there being a business for NICs purposes.
A landlord will also be a self-employed earner if any of their activities amount to a trade for Income Tax purposes. This could include, for example, receiving income from other services provided to tenants.
If you would like more information or would like to discuss your tax affairs in more detail please contact our Tax Partners Steve Crompton or Lucy Williams on the details below:
Partner – Head of Tax
direct dial: 01942 292541
mobile: 07790 840394
direct dial: 01942 292543
mobile: 07807 053494