Until April 2015 HMRC had been pursuing Landlords who owned multiple properties. HMRC tried to claim up to 6 years Class 2 NI from Landlords saying that owning multiple property investments was a business and therefore Class 2 NI was payable.
HMRC said…
The nature of property letting requires some activity to maintain the investment, but that is not enough to make it a business. For example, being a landlord normally involves:
- 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.
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 above).
For example, 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.
NIM23800 – Special cases – property letting: business for Class 2 National Insurance Contributions
A Recent Case Rashid v Garcia [2002] UKSC SpC 348 over turned this view and since April 2015 Class 2 NI has only been due where Class 4 NI is payable.
Rental income isn’t subject to Class 4 NI.
However, Landlords operating as business can volunteer to pay Class 2 NI.
steve@bicknells.net
