NIC class 2+4 mandatory or not – Unanswered question?

NIC class 2+4 mandatory or not – Unanswered question?

13:58 PM, 16th March 2022, About 2 months ago 7

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This financial year 20/21 my wife and I retired and I have decided to do our own tax returns.

We have 2 rental properties, the last purchased 10 or so years ago.

From the gov.uk website I believe we do not constitute a business, and therefore do not have to pay mandatory NIC. I have written 5 times to relevant departments, the last being a complaint, phone called, but not received an answer.

Can anyone help me, please?

Many thanks

John



Comments

by Neil Patterson

14:04 PM, 16th March 2022, About 2 months ago

Hi John,

From >> https://www.property118.com/landlords-class-2-national-insurance/

Landlords are NOT obliged to pay Class 2 National Insurance, regardless of whether they are running a business, unless they are also a trade.

“The key word here is ‘business’. A person who is liable to income tax on the profits arising from the receipt of property rental income, will be a self-employed earner for NIC purposes if the activities carried out amount to running a business. This much has not changed. Those in business letting property before 6 April 2015 had a liability to Class 2. Now they can opt to pay voluntarily”

“In summary:

Letting property may amount to being in business, but if it does not, there is not (and never has been) a liability or entitlement to pay Class 2 NIC.
If letting property does amount to a business, but not a trade, it makes the landlord a self-employed earner eligible to pay Class 2 NIC (he or she would have been liable to pay Class 2 before 6 April 2015).
Where the letting business is also a trade because it includes more than property letting, the profits are liable to compulsory Class 2 and Class 4 if the trading profits exceed the relevant thresholds”

by Yvonne Francis

16:15 PM, 16th March 2022, About 2 months ago

I'm not sure why you are writing to HMRC unless you want previous accounts amended. You are not a business if you can claim it is investment income.

You don't say how you will be doing your accounts. Will you be doing them on paper or online? I do mine by paper so there is never a problem but my partner does them online. Unfortunately he is losing his memory so I had to help him. At first I could not get his accounts to accept he was not a business. In the end we had to ring HMRC and they went through the procedure with me. By the way they did not question whether or not he was a business. They told me I had to say I was a business and at the end I had to use their facility to cancel the part stating he was a business. All went through ok in the end. Typical Alice in Wonderland HMRC practices!

If I have the wrong end of the stick on all this, and you really need to contact them, then ring them. You may have to wait these days but I find them always really helpful.

by Grumpy Doug

16:45 PM, 16th March 2022, About 2 months ago

If they're in your names as private individuals as you describe, you're not a business. Just declare your property income and expenses as usual via self assessment, and enjoy your retirement. No NI to pay. At least not yet, you never know what the sneaky beggars have planned for us!

by Chris Bradley

18:36 PM, 16th March 2022, About 2 months ago

I pay class 3 voluntary as my main employment was contracted out so although I have enough years for a full pension I don't get one, but if I pay 4years voluntary I do. It's a pain dealing with national insurance as they give different figures to DWP, and you do get referred back and fore between the departments. The first year they sent me a bill and payment was easy, but for 2021 they haven't and I've chased it and.they have a six month backlog

by Jane Tomlin

8:57 AM, 17th March 2022, About 2 months ago

Our accountant charges £150 pa to do our accounts, not worth the hassle to do them yourself. I was also told that HMRC target those that do their own returns as they are far easier to fine/find mistakes in their paperwork/returns!

by Simon Lever

13:54 PM, 17th March 2022, About 2 months ago

If you are retired and receive state pension you do not need to pay Class 2 NI.
Property income is investment income and not employment or self employment.
No need to pay class 2 NI whichever the case.

by John Boss

11:54 AM, 22nd March 2022, About 2 months ago

Hello,
Can I thank everyone who has contributed to our problem and was very grateful for the advice given.

Today we both received letters from HMRC stating the NIC was not mandatory for property rental, although to enquire on our pension position before deciding to pay voluntary.

Best regards to you all.
John


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