Register as a sole trader solely to pay voluntary class 2 NI contributions?

michaels

Would purchasing a single item at a car boot sale or wholesaler and then selling on on eBay count as trading?  If not, how many sales would be needed?

NedS

michaels said:

Would purchasing a single item at a car boot sale or wholesaler and then selling on on eBay count as trading?  If not, how many sales would be needed?

You would need to be trading sufficient to convince HMRC that it is a genuine business and not registered purely for the basis of avoiding paying NIC at the higher rate. It is not normally required to register for self assessment with a turnover of less than £1000, so I would say you would need to be able to evidence a turnover of at least £1000 per year. HMRC require you to keep all invoices and receipts for 6 years.

Johnnyboy11

You can qualify for Class 2 NICs if you are an Investor. Not sure how that's defined, but it's there as an option.

Terron

Johnnyboy11 said:

You can qualify for Class 2 NICs if you are an Investor. Not sure how that's defined, but it's there as an option.

NIM74250 describes the rules for property and investment businesses. In summary there are three categories:

• a person who does nothing more than dabble occasionally.  Such individuals will not pass the test for gainful (self-) employment [snip] Such individuals will not be entitled to pay voluntary Class 2 NICs
• a person who does more than dabble and so passes the test for gainful (self-) employment [snip] but does not do enough to pass the trade, profession or vocation test [snip] Such individuals are not required to pay Class 2 or Class 4 NICs [snip] these individuals will be entitled to pay Class 2 NICs voluntarily.
• a person who has sufficient activity to pass both the test for gainful self-employment for Class 2 NICs purposes and the trade, profession or vocation test [snip]. Such individuals will fall within Self Assessment, and will be liable to Class 2 and Class 4 NICs on the proceeds of their investment related activities (if these exceed the small profits threshold and the lower profits limit respectively).

Dazed_and_C0nfused

On that return, they can say, honestly, , 'Hey, I didn't do any trading this year, but here's my class 2 contribution. The government I suppose can refuse to accept the NI contributions, but is that actually attempted fraud? 

I'm not sure you have actually tried to complete a return?

If you don't complete the self employment page you won't get the option to pay Class 2 National Insurance.

reactivespecies

I'm not sure you have actually tried to complete a return?

If you don't complete the self employment page you won't get the option to pay Class 2 National Insurance.

No I haven't. Thanks for that information.

reactivespecies

NedS said
It is not normally required to register for self assessment with a turnover of less than £1000, so I would say you would need to be able to evidence a turnover of at least £1000 per year. HMRC require you to keep all invoices and receipts for 6 years.

It all seems a bit of a grey area. The gov.uk page I pasted earlier states that you need to register as a sole trader if you make more than £1000 in a year OR if you want to pay class 2 contributions. Even a business making £1000/year is hardly a serious going concern so who knows where they draw the line. 

Silvertabby

I did look at Class 2s - but decided to go the Class 3 route for the 4 extra years I need.  

Just not worth all the faff involved.  

SomeMadeUpName

Terron said:

Johnnyboy11 said:

You can qualify for Class 2 NICs if you are an Investor. Not sure how that's defined, but it's there as an option.

NIM74250 describes the rules for property and investment businesses. In summary there are three categories:

• a person who does nothing more than dabble occasionally.  Such individuals will not pass the test for gainful (self-) employment [snip] Such individuals will not be entitled to pay voluntary Class 2 NICs
• a person who does more than dabble and so passes the test for gainful (self-) employment [snip] but does not do enough to pass the trade, profession or vocation test [snip] Such individuals are not required to pay Class 2 or Class 4 NICs [snip] these individuals will be entitled to pay Class 2 NICs voluntarily.
• a person who has sufficient activity to pass both the test for gainful self-employment for Class 2 NICs purposes and the trade, profession or vocation test [snip]. Such individuals will fall within Self Assessment, and will be liable to Class 2 and Class 4 NICs on the proceeds of their investment related activities (if these exceed the small profits threshold and the lower profits limit respectively).

That's interesting.
So if you fell into the middle category would your investment profits then count as earned income and allow you to make personal pension contributions based on them?
&
What would they class as a property (as opposed to stocks/shares) investor? Would a rental landlord with a decent number of bedrooms and sitting on an uncrystallised capital gain count, or do you need to be flipping?  

glennevis

SomeMadeUpName said:

So if you fell into the middle category would your investment profits then count as earned income and allow you to make personal pension contributions based on them?
&
What would they class as a property (as opposed to stocks/shares) investor? Would a rental landlord with a decent number of bedrooms and sitting on an uncrystallised capital gain count, or do you need to be flipping?  

Off-topic for the OP, but see NIM23800

https://www.gov.uk/hmrc-internal-manuals/national-insurance-manual/nim23800

Which explains how and why a landlord with no other income pays class 2 NICs.