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.
Class 2 National Insurance Contributions (NICs) are currently paid at the rate of £3.05 per week by self-employed earners.
HMRC have recently issued clarification which states that 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 following list:
- 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.
- Collecting rents.
The HMRC guidance suggests that the 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.
A landlord will also be a self-employed earner if any of their activities amount to a trade for Income Tax purposes. This could include, for example, receiving income from other services provided to tenants.
Rob Case is Partner and Head of Tax and if you have any queries or concerns about anything in this article, you can contact his team on firstname.lastname@example.org or call 01242 776000. See our Tax Service page for more information about our range of services.
Other articles which may interest you: