Sleeping Partners and NI

In the past sleeping partners and inactive partners didn't have to pay NI contributions on their partnership profits. However, HMRC changed its view on this in April 2013 and it now considers that all partners are liable to pay NICs in respect of their taxable profits, whatever their level of activity within the business. The implications for inactive and sleeping partners are:

- if not already registered as self-employed, the person must register with HMRC and arrange to pay class 2 NICs from 6 April 2013;

- exemption from paying class 2 NICs can be claimed if the taxable profits are low, or the individual has another employment; and

- class 4 NICs will be due on their profits from 2013/14 onwards and will collected through the normal self-assessment for 2013/14.

Changes to NIC Class 2 Payments

As a self-employed person you probably pay your class 2 NIC, (formerly known as 'NI stamp') by monthly direct debit, or when the quarterly bill arrives from the Tax Office.

From April 2011 the Tax Office is changing the way it collects class 2 NICs. The payment will be due in two equal instalments on 31 July and 31 January. The Tax Office will send out separate bills for the class 2 NICs in April and October that demand payment for the amounts due in the following July and January.

If you already have a monthly direct debit set up to pay your class 2 NICs, those direct debits will be suspended from April 2011 and will start again in August 2011. You can opt to pay your class 2 NIC bill when the payments become due in July and January, by telephone banking, Bank Giro, at the Post Office, by direct debit or by cheque.