This is what has happened to me, as I am employed I am, paying sufficient class 1 NICs so do not require class 2 NICs.
I can't see any way to respond to blog so thought I would start a new thread for comments. I have been arguing this unsuccessfully for 4 months. It seems that HMRC are targeting some landlords but not all, but they are not saying why.
Even though in the case of Rashid v Garcia [2003] SSCD 36, the Special Commissioners concluded that class 2 contributions were not payable on let property. But they seem to also ignore this.
I guess we are just waiting for a Landlord with enough time on their hands to fight this, but otherwise HMRC are demanding this payment. I paid this without researching, so I'm on the backfoot and trying to get my money back.
Is anyone else fighting this and had any luck?
Thanks
Michael
-- Edited by MichaelWGroves on Sunday 2nd of November 2014 06:15:57 PM
HMRC are in the process of writing to landlords if they determine that the income is from self employment NI is payable. If they determine that the income is investment income no NI is payable.
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I think the letter you are referring to is the "Property Letting Form" I received one of these and returned it. When I questioned which part of this form confirms I should pay class 2 NICs they repeatedly ignored my questions.
In the case of Rashid v Garcia 2003 SSCD 36 the Special Commissioner reached the conclusion that, whilst not free from doubt, property letting is not a business (merely an investment requiring active management).
Therefore unless you offer a service to your tenants such as gardening or cleaning, you are not a business and therefore not liable to class 2 NICs.
I believe HMRC are relying on the majority of landlords in not checking and simply paying!
Hi Michael,
This was news to me. I found the following article from Taxation Magazine which suggests it is news to most people. From a different thread you mentioned you had quite a few properties and this may be part of the problem but I think it's worth appealing against.
Thanks, I thought is might be because of the amount of properties also, but HMRC will not confirm why ?
I have just completed my tax return and this mentions a few relevant points in the help
Section 4. Rent
"If you own UK land or property which produces rents or other receipts we treat you as operating a property rental business (whether you have one or several properties)."
There was another section about being self employed only if you offer a service such as meals and cleaning. But I can't find it now. Please look out for this if you are completing your self assessment and post back.
I've been fighting this for 4 months with no luck.
I'll post updates as they come, but HMRC seem to take 4 weeks to answer every letter!
I just called HMRC for update, looks like they are cooling off a bit. They've got so many responses from landlords advising they are not self employed that they need to take a second look. My advice is write back and mention Rashid v Garcia [2003].
This will get them off your case until a new law is passed.
Alternatively if your income is below £5,885 you can get an exception, form CF10. However, if you are employed with an income over £41,865 and self-employed income above £5,885 you can apply for Deferment, form CA728.
