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HMRC internal manual

National Insurance Manual

Class 2 National Insurance contributions: special cases: property and investment businesses

There are effectively 3 tiers of activity in relation to those undertaking investment related activities:

  • a person who does nothing more than dabble occasionally.  Such individuals will not pass the test for gainful (self-) employment in section 2(1)(b) of the Social Security Contributions and Benefits Act 1992 (SSCBA) (although they may be taxable on their gains under Self Assessment).  Such individuals will not be entitled to pay voluntary Class 2 NICs under section 11(6) SSCBA 1992.
  • a person who does more than dabble and so passes the test for gainful (self-) employment in section 2(1)(b) of the SSCBA 1992 such that they are a self-employed earner for the purposes of Class 2 NICs, but does not do enough to pass the trade, profession or vocation test for an income tax charge to arise under Chapter 2 of Part 2 of the Income Tax (Trading and Other Income) Act 2005 (ITTOIA) on the proceeds of their investment related activities. Such individuals are not required to pay Class 2 or Class 4 NICs under sections 11(2) and 15 of the SSCBA 1992 (although they may be taxable on their gains under Self Assessment). Under section 11(6) of the SSCBA 1992, 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 for an income tax charge to arise under Chapter 2 of Part 2 of ITTOIA 2015. 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).

For more information on property letting, see NIM23800.