Class 2 National Insurance contributions

by Readers Question

10:07 AM, 7th February 2016
About 3 years ago

Class 2 National Insurance contributions

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Class 2 National Insurance contributions

Hello.. my sole income is from the rental of one property, I receive enough to live on however do not pay NI Contributions. I WANT TO pay NI voluntarily. Class 2 National Insurance contributions

As the income is from an investment, and in my sole income, can I voluntarily pay class 2 (cheaper rate)?

It says in the .GOV web site that Class 2 National Insurance can be paid by people involved in investment for themselves or others with out commission, and it says that property income is classed as an investment so this seems logical..

It is not a bandb or holiday let..

Thanks

Kim



Comments

Colin Dartnell

17:01 PM, 7th February 2016
About 3 years ago

Hi Kim
 
Class 2 is £2.80 a week, but you also have to pay Class 4 NI at 9% on profits exceeding about £8,000 per annum until you are 65 years of age.
 
Self employed persons have to pay both Class 2 and Class 4 NI.

Hope this helps.

Colin Dartnell

17:03 PM, 7th February 2016
About 3 years ago

Hi Kim

Class 2 is £2.80 per week, but you also have to pay Class 4 NI at 9% on profits exceeding about £8,000 per annum until you are 65 years of age.
 
Self employed persons have to pay both Class 2 and Class 4 NI.
 
Hope this helps.

Colin Dartnell

20:59 PM, 7th February 2016
About 3 years ago

P.S. The 65 years of age, is relevant to me, it may be different for other age groups.

Simon Lever

21:20 PM, 7th February 2016
About 3 years ago

Sorry to say that you cannot pay class 2 NI on the rental of one property. According to the Revenue Web Site http://www.hmrc.gov.uk/manuals/nimmanual/nim23800.htm:

"... 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."

Sound familiar?

See the link above for the full story. But to cut a long story short you need to be running a property business not just an investment.

Class 2 NI contributions are now collected with the tax you pay on your income tax return twice a year in Janaury and July.

You should get a pension quote from the Pension Service http://www.gov.uk/state-pension-statement and then make voluntary contributions to bring your pension account up to date.

Lou Brazendale

7:17 AM, 8th February 2016
About 3 years ago

Thank you all for your help, I retread the sections highlighted by Simon and am now in the picture
Thank you

John Frith

12:15 PM, 8th February 2016
About 3 years ago

This is outside the OP's question, but I wondered if this definition of running a business (for Class 2 National Insurance Contributions) bore any relationship with the definition of running a business for the purposes of incorporating a rental property business and claiming s162 relief?


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