Do landlords have to pay class 2 National Insurance?
We have three properties which we let out via a letting agent. My husband works full time and I have no other income. I am told that the tax man treats these properties as “investments”, (such as buying stocks and shares to quote them) rather than a business, thus limiting the type of expenses we can offset against them.
However, they want my husband to pay Class 2 NI contributions as they are classing him as being self employed.
This seems like ‘double speak’ to me – either it is a business or it isn’t.
Do all landlords pay these contributions?
Thanks
Sophie
UPDATE
This discussion thread is now closed. By all means read through the pages of comments to understand the level of confusion surrounding this topic. However, the definitive answer was eventually posted by a Chartered Accountant who specialises in landlord taxation. His response quoted both legislation and case law. Link to his comment HERE.
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Member Since June 2013 - Comments: 1121
9:36 PM, 4th February 2014, About 12 years ago
And before you ask I pay income tax on my rental profits.
Member Since September 2013 - Comments: 333
9:41 PM, 4th February 2014, About 12 years ago
Reply to the comment left by “Gary Nock” at “04/02/2014 – 21:36“:
Gary,
Please don’t take offence and see the humour implied 🙂
Whether you pay Tax or not is none of my business 🙂
Comments: 9
9:42 PM, 4th February 2014, About 12 years ago
Reply to the comment left by “Gary Nock” at “04/02/2014 – 21:36“:
Guess my comment is ignored!! Fact is if you work in any significant aspect of your BTL business you are deemed (fairly I reckon) by HMRC to be self employed and not merely an Investor.
If you stay hands off you can justifiably ignore self employed NI contributions and argue with HMRC if they come knocking. Employing an agent and using sub contractors to do all repairs etc is staying hands off…!
Member Since September 2013 - Comments: 333
9:44 PM, 4th February 2014, About 12 years ago
Reply to the comment left by “Gary Nock” at “04/02/2014 – 21:35“:
If property income is a persons only form of income we just need to ask one question.
Would HMRC consider them Self Employed?
Answer: Yes, of course, so therefore Income Tax and NI would be due. 🙂
REMEMBER- Your tax contributions go towards helping the less fortunate in this world. 🙂
Comments: 9
9:45 PM, 4th February 2014, About 12 years ago
Thats wrong Richard… Talk to HMRC and they will confirm what I have said – twice now!!
Member Since September 2013 - Comments: 333
9:45 PM, 4th February 2014, About 12 years ago
Reply to the comment left by “mark standley” at “04/02/2014 – 21:42“:
Mark,
Your comments were not ignored.
Thanks for the input! 🙂
REMEMBER- Your tax contributions go towards helping the less fortunate in this world. 🙂
Member Since February 2014 - Comments: 4
9:46 PM, 4th February 2014, About 12 years ago
Reply to the comment left by “mark standley” at “04/02/2014 – 21:42“:
Hi Gary. Thank you for responding to my question. We rent through an agent on a ‘full management’ basis and we keep the local tradesman pretty busy keeping these houses in good shape – probably why we don’t make any profit on them
Member Since September 2013 - Comments: 333
9:49 PM, 4th February 2014, About 12 years ago
Reply to the comment left by “mark standley” at “04/02/2014 – 21:45“:
Mike,
If in doubt speak to an accountant 🙂
Mark,
Your comments were not ignored.
Thanks for the input! 🙂
REMEMBER- Your tax contributions go towards helping the less fortunate in this world. 🙂
Member Since September 2013 - Comments: 333
9:52 PM, 4th February 2014, About 12 years ago
Reply to the comment left by “Sophie Langdale ” at “04/02/2014 – 21:21“:
Sophie,
What have HMRC said about the Class 2 NI requirement?
Are you in discussions with them at the moment?
Member Since January 2011 - Comments: 12209 - Articles: 1408
9:53 PM, 4th February 2014, About 12 years ago
Where are all the qualified accountants when we need them?
I haven’t posted as I’m not entirely certain myself as I’m both employed and self employed as well as owning both commercial and residential investment properties for as long as I can remember.
Hopefully the accountants will post the answer when they get to work and read their emails in the morning 🙂
.