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HMRC internal manual

National Insurance Manual

Class 4 NICs: who is liable: sleeping partners - an introduction

Social Security Contributions and Benefits Act 1992 Section 2(1)(b) 

Social Security Contributions (Limited Liability Partnership) Regulations 2014, Regulations 2B & 2C  (SI 2015/607).

HMRC has reviewed its interpretation of Social Security law as it applies to sleeping partners. HMRC now considers that sleeping partners, since the National Insurance Scheme was reconstructed in 1975, have been liable to pay both Class 2 National Insurance contributions (NICs) as self-employed earners and Class 4 NICs in respect of their taxable profits. HMRC will not seek to recover past liabilities. It will enforce the revised interpretation of the law from the start of the 2013/14 tax year in respect of that year and subsequent tax years

Sleeping partners

This is not a legal concept, but is often used to describe a partner who does not take an active part in the partnership business but receives a share of the partnership profit. HMRC considers that a general partnership, a limited partnership and a limited liability partnership may have partners who could be described as being “sleeping partners.”


See NIM24520, NIM24522, NIM24523, NIM24524