Unemployed and NI contributions

NedS

eskbanker said:

itwasntme001 said:

What does class 1 credits mean, will it be enough to get the year as qualifying for state pension?  Would she need to add more money?

Yes, they're sufficient to qualify for pension purposes without additional top-up contributions being needed.

May need to hurry though, as for the year to qualify I believe you will need credits for 50 out of the 52 weeks assuming you are relying on credits alone.

whizzywoo

itwasntme001 said:

Funnily enough my partner called HMRC and asked to get herself registered for 19/20 self assessment due to the btl.  The HMRC employee said that she is also eligible to pay class 2 NI and that a letter will be sent separate to the SA for her to be able to pay.  She clarified whether she really could given owning and letting a single property does not classify her as self-employed but HMRC said that it was not true and that she is self-employed.

I'm not sure that you have been given the correct information.  This is a link to Gov website about it:
https://www.gov.uk/hmrc-internal-manuals/national-insurance-manual/nim23800
The main relevant points are and then there are some examples at the end but read the whole link to make sure what applies:

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 above).

For example, 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 such as providing a bank of washing machines in a multi-occupancy block that is rented to tenants, or providing an ironing service to tenants. Running a guest house or hotel will also usually amount to a trade for Income Tax purposes, so an individual proprietor will be a self-employed earner for NICs purposes.

If a property owner has an agent who manages their property for them, things that the agent does should be attributed to the owner. ‘Agent’ includes a friend or family member, as well as a professional managing agent. However, a property owner will only be a self-employed earner on this basis if the things that the agent does for them (ignoring any other clients they might have) are enough to count as a business or trade.

nick74

itwasntme001 said:

Funnily enough my partner called HMRC and asked to get herself registered for 19/20 self assessment due to the btl.  The HMRC employee said that she is also eligible to pay class 2 NI and that a letter will be sent separate to the SA for her to be able to pay.  She clarified whether she really could given owning and letting a single property does not classify her as self-employed but HMRC said that it was not true and that she is self-employed.

Badly trained HMRC call centre drone talking tripe unfortunately. Rental income in itself is not, and never has been classed as self-employment nor subject to National Insurance. 

xylophone

And re pension contributions and tax relief https://www.pruadviser.co.uk/knowledge-literature/knowledge-library/tax-relief-members-contributions/

Has she obtained a state pension forecast? https://www.gov.uk/check-state-pension

itwasntme001

whizzywoo said:

itwasntme001 said:

Funnily enough my partner called HMRC and asked to get herself registered for 19/20 self assessment due to the btl.  The HMRC employee said that she is also eligible to pay class 2 NI and that a letter will be sent separate to the SA for her to be able to pay.  She clarified whether she really could given owning and letting a single property does not classify her as self-employed but HMRC said that it was not true and that she is self-employed.

I'm not sure that you have been given the correct information.  This is a link to Gov website about it:
https://www.gov.uk/hmrc-internal-manuals/national-insurance-manual/nim23800
The main relevant points are and then there are some examples at the end but read the whole link to make sure what applies:

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 above).

For example, 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 such as providing a bank of washing machines in a multi-occupancy block that is rented to tenants, or providing an ironing service to tenants. Running a guest house or hotel will also usually amount to a trade for Income Tax purposes, so an individual proprietor will be a self-employed earner for NICs purposes.

If a property owner has an agent who manages their property for them, things that the agent does should be attributed to the owner. ‘Agent’ includes a friend or family member, as well as a professional managing agent. However, a property owner will only be a self-employed earner on this basis if the things that the agent does for them (ignoring any other clients they might have) are enough to count as a business or trade.

Thanks that is very useful.  My partner is looking for other properties to buy and the current btl is her only "occupation", so could that mean she is self-employed?  It appears so given the link you have provided however i am guessing in reality it is open to interpretation and the line crossing over to self-employed is subjective with regards to "looking for more properties" and "being her only/main occupation"?

itwasntme001

NedS said:

eskbanker said:

itwasntme001 said:

What does class 1 credits mean, will it be enough to get the year as qualifying for state pension?  Would she need to add more money?

Yes, they're sufficient to qualify for pension purposes without additional top-up contributions being needed.

May need to hurry though, as for the year to qualify I believe you will need credits for 50 out of the 52 weeks assuming you are relying on credits alone.

Can you backdate NI credits or can she only apply for the current tax year?

whizzywoo

Thanks that is very useful.  My partner is looking for other properties to buy and the current btl is her only "occupation", so could that mean she is self-employed?  It appears so given the link you have provided however i am guessing in reality it is open to interpretation and the line crossing over to self-employed is subjective with regards to "looking for more properties" and "being her only/main occupation"?

Have you read the whole link and not just the bit I quoted?  I would be very surprised if HMRC agreed that just having one Buy to Let property meant someone was gainfully self employed.

nick74

itwasntme001 said:

whizzywoo said:

itwasntme001 said:

Funnily enough my partner called HMRC and asked to get herself registered for 19/20 self assessment due to the btl.  The HMRC employee said that she is also eligible to pay class 2 NI and that a letter will be sent separate to the SA for her to be able to pay.  She clarified whether she really could given owning and letting a single property does not classify her as self-employed but HMRC said that it was not true and that she is self-employed.

I'm not sure that you have been given the correct information.  This is a link to Gov website about it:
https://www.gov.uk/hmrc-internal-manuals/national-insurance-manual/nim23800
The main relevant points are and then there are some examples at the end but read the whole link to make sure what applies:

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 above).

For example, 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 such as providing a bank of washing machines in a multi-occupancy block that is rented to tenants, or providing an ironing service to tenants. Running a guest house or hotel will also usually amount to a trade for Income Tax purposes, so an individual proprietor will be a self-employed earner for NICs purposes.

If a property owner has an agent who manages their property for them, things that the agent does should be attributed to the owner. ‘Agent’ includes a friend or family member, as well as a professional managing agent. However, a property owner will only be a self-employed earner on this basis if the things that the agent does for them (ignoring any other clients they might have) are enough to count as a business or trade.

Thanks that is very useful.  My partner is looking for other properties to buy and the current btl is her only "occupation", so could that mean she is self-employed?  It appears so given the link you have provided however i am guessing in reality it is open to interpretation and the line crossing over to self-employed is subjective with regards to "looking for more properties" and "being her only/main occupation"?

Bear in mind that if you go down the route of trying to classify it as self-employment, then in addition to the Class 2 NI she will also become liable for Class 4 National Insurance at 9% on her rental profits above £9501 per year. For this reason most large scale BTL landlords are very keen to ensure that what they're doing isn't treated as self-employment by HMRC.

A case of 'be careful what you wish for' perhaps?

itwasntme001

whizzywoo said:

Thanks that is very useful.  My partner is looking for other properties to buy and the current btl is her only "occupation", so could that mean she is self-employed?  It appears so given the link you have provided however i am guessing in reality it is open to interpretation and the line crossing over to self-employed is subjective with regards to "looking for more properties" and "being her only/main occupation"?

Have you read the whole link and not just the bit I quoted?  I would be very surprised if HMRC agreed that just having one Buy to Let property meant someone was gainfully self employed.

Yes i did read the whole link and my interpretation still stands.  Couldn't she be classed as self-employed since she is looking for further properties to buy and being a landlord is her only "occupation" currently?  You say you would be very surprised but you have not completely ruled it out.

itwasntme001

nick74 said:

itwasntme001 said:

whizzywoo said:

itwasntme001 said:

Funnily enough my partner called HMRC and asked to get herself registered for 19/20 self assessment due to the btl.  The HMRC employee said that she is also eligible to pay class 2 NI and that a letter will be sent separate to the SA for her to be able to pay.  She clarified whether she really could given owning and letting a single property does not classify her as self-employed but HMRC said that it was not true and that she is self-employed.

I'm not sure that you have been given the correct information.  This is a link to Gov website about it:
https://www.gov.uk/hmrc-internal-manuals/national-insurance-manual/nim23800
The main relevant points are and then there are some examples at the end but read the whole link to make sure what applies:

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 above).

For example, 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 such as providing a bank of washing machines in a multi-occupancy block that is rented to tenants, or providing an ironing service to tenants. Running a guest house or hotel will also usually amount to a trade for Income Tax purposes, so an individual proprietor will be a self-employed earner for NICs purposes.

If a property owner has an agent who manages their property for them, things that the agent does should be attributed to the owner. ‘Agent’ includes a friend or family member, as well as a professional managing agent. However, a property owner will only be a self-employed earner on this basis if the things that the agent does for them (ignoring any other clients they might have) are enough to count as a business or trade.

Thanks that is very useful.  My partner is looking for other properties to buy and the current btl is her only "occupation", so could that mean she is self-employed?  It appears so given the link you have provided however i am guessing in reality it is open to interpretation and the line crossing over to self-employed is subjective with regards to "looking for more properties" and "being her only/main occupation"?

Bear in mind that if you go down the route of trying to classify it as self-employment, then in addition to the Class 2 NI she will also become liable for Class 4 National Insurance at 9% on her rental profits above £9501 per year. For this reason most large scale BTL landlords are very keen to ensure that what they're doing isn't treated as self-employment by HMRC.

A case of 'be careful what you wish for' perhaps?

That is true but her profits are not much above the £9501 so the total amount payable is pretty small.