Unemployed and NI contributions

whizzywoo

itwasntme001 said:

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.

I'm not ruling it out because I'm now retired from accountancy and not completely up to date with rules. But I did work of this sort for over 40 years and that's why I would be very surprised.

nick74

itwasntme001 said:

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.

But it's Catch-22; she currently has only one rental property so HMRC are extremely unlikely to consider that constitutes self-employment. You say she is considering buying further rental properties, and if she did that might strengthen her case for treating it as self-employment, at which point HMRC rub their hands together and start collecting Class 4 NI on the rental profit from the extra properties! 

NedS

itwasntme001 said:

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?

Only if you can show good cause why you didn't apply for the benefit at the time. In the vast majority of cases the answer to backdating requests for JSA is no.

itwasntme001

NedS said:

itwasntme001 said:

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?

Only if you can show good cause why you didn't apply for the benefit at the time. In the vast majority of cases the answer to backdating requests for JSA is no.

I think given the replies and what i have read its safe to say my partner will not be classed as self-employed.

She has been going round in circles with calling up about the NI credits.  The post by xylophone earlier has a phone number which my partner dialed twice separately and on both occasions was basically told to "use google and fill out a form".  No further useful information was provided despite her persisting to ask for more clarification (and she can be very persistent!).

Reading on the government website that was also provided earlier, it states that she would need to contact the local job center.  They are shut and seem to be shut for a whilst given the virus so i imagine this can be taken as a good reason to backdate the NI credits?  She also has used a local council run careers service in January so perhaps this can be used as evidence of job searching?

NedS

itwasntme001 said:

I think given the replies and what i have read its safe to say my partner will not be classed as self-employed.

She has been going round in circles with calling up about the NI credits.  The post by xylophone earlier has a phone number which my partner dialed twice separately and on both occasions was basically told to "use google and fill out a form".  No further useful information was provided despite her persisting to ask for more clarification (and she can be very persistent!).

Reading on the government website that was also provided earlier, it states that she would need to contact the local job center.  They are shut and seem to be shut for a whilst given the virus so i imagine this can be taken as a good reason to backdate the NI credits?  She also has used a local council run careers service in January so perhaps this can be used as evidence of job searching?

Just apply for New Style JSA. She will be assessed for NI contributions to see if she qualifies, and when she doesn't they will convert the claim to a credits only claim. They will most likely not backdate the claim. The fact you have struggled to get clear and concise information will not be deemed good cause. Currently, claimants do not need to be looking for work given the current situation with Covid-19, so you do not need to worry about that.

itwasntme001

Ok will get her to apply.  Would the NI credits start from the date the application is sent even though she won't qualify for JSA or would it start from some future date?  Mindful of the fact that she would need 50 weeks of NI credits and nearly 2 weeks are finished already for this tax year.

NedS

Credits should start from the date you submit the application.

itwasntme001

Thanks for your help NedS.  My partner did apply and has just received a letter today about the claim.  Not surprisingly it says she can not receive any JSA given lack of contributions.

It did say that Class 1 NI may still be credited "if you continue to attend the Jobcentre".  Nothing more about this is mentioned in the letter.  What does she need to do to make sure she gets the credits?  The local job center is "temporarily closed" obviously.  Is it just a case of waiting till they reopen and then contacting them?  Presumably she can get the credits backdated from application submission?

itwasntme001

Anyone have any advice on this?

whizzywoo

itwasntme001 said:

Anyone have any advice on this?

You'd be better asking about Jobseekers etc on the Benefits section.
https://forums.moneysavingexpert.com/categories/benefits-tax-credits