Is Class 4 NIC due on a UK property tax return?

by Readers Question

11:27 AM, 15th January 2019
About 2 years ago

Is Class 4 NIC due on a UK property tax return?

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Is Class 4 NIC due on a UK property tax return?

Completing a self assessment tax return for filing this January with only the UK Property page, no employment, no self employment. The summary tax calculation is now including Class 4 NICs at 9% of the profit on the tax calculation summary page.

I’ve seen various articles if this is, or is not, due to be paid as a buy to let landlord. It’s automatically generating 9% tax on the profit as it is over £8424. If it is not due, how can this be amended as it is generating this NIC total automatically. I used to pay Class 2 NIC but that has disappeared, is that still an option in 2018 or has that now been abolished. What would you recommend and is Class 4 NIC now due for payment by all buy to let landlords?

I hope this question makes sense. The properties are not in a partnership or company.

Thank you


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Adrian Alderton

19:31 PM, 16th January 2019
About 2 years ago

This does seem to be a very confusing area. I was considering setting up a partnership with my partner (non-married) as I felt we qualified through the hours worked on self-managing our small property portfolio (10props). This was to potentially enable future incorporation. My accountant advised we would have to pay NIC class 2 as a 'business'. We didnt want to do this as we are both fully paid up.
Subsequently I was told by a tax expert at a landlord event (probably more qualified) that I wouldn't have to pay NIC. I cant recall the legal clause quoted.
Anyway HMRC appear to be advising that you do have to pay NIC on their latest landlord advice.
They go on to say renting out a property is classed as running a business so have to pay Class 2 NI

I may have misintepreted but it does appear that you have to register for NIC class 2 if you want to set up a partnership.
Any comment or advice.


20:04 PM, 16th January 2019
About 2 years ago

This extract from HMRC's internal National Insurance Manual does help make it clearer what they would consider as a business and gives some examples...

Mark Alexander

20:07 PM, 16th January 2019
About 2 years ago

The forms to register a partnership with HMRC do make defence to NIc’s and allude to them being compulsory. However, the forms assume a trade applies, which is rare for a property investment business. Accordingly, class 2 NIC’s are optional. See the link I posted to the ICEAW website above, which explains this is far greater detail

Mark Alexander

20:14 PM, 16th January 2019
About 2 years ago

Reply to the comment left by R S at 16/01/2019 - 20:04
Sadly, the HMRC manual you have quoted is at odds with this one

Professional advice is becoming a must these days, and it is essential the person giving that advice has professional indemnity insurance

Martin Thomas

9:48 AM, 19th January 2019
About 2 years ago

Benji - suggest you double check that you haven't ticked the box at the beginning of the tax return to say that you are self employed? That would generate a Class 4 NIC charge if you are over the threshold.

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