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Renting your way to a benefit

13 October 2015 / David Heaton
Issue: 4522 / Categories: Comment & Analysis , Residence & domicile
5973

The question of property income creating a class 2 National Insurance liability causes some head-scratching.

KEY POINTS:
  • Class 2 National Insurance has been reformed by NICA 2015.
  • A self-employed earner is defi ned as being in “gainful employment”.
  • When does a business constitute self-employment?
  • Voluntary class 2 contributions may be paid.

Picture the scenario. A client comes to his adviser saying: “I am a landlord of four properties. My friend at the golf club said he had to pay National Insurance contributions on the income from his property portfolio. I thought it was only due on wages. Surely I shouldn’t have to pay National Insurance on rental income?”

Rather than answer the adviser countered with two questions: “When was your friend told to pay National Insurance because the law has changed and what was he doing to earn the rents because it matters in determining his...

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