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Is property now classed as ‘business income’?


I’m told that property income is now deemed business income. Although it is investment income it is now deemed income for class 2 National insurance contributions.


I note that you do not mention this in your various replies because surely this should be advised to property investors as they would if the income exceeds the class 2 income limit be liable for a fine if they do not notify the authorities with in 3 months of starting. You views would be appreciated.


Arthur Says

Property letting will rarely be regarded as self-employment for NI purposes, although if the extent of the landlord's involvement in managing the lettings and looking after the properties is substantial (which might be particularly relevant for furnished holiday lettings), it is possible that the activities will constitute a business, in which case Class 2 NICs will be payable.


Class 4 NICs are only payable where income is taxed as trading income. Even though rents are now treated as being from a business in calculating property income, this is not the same as saying that a business actually exists, and it does not alter the NI position.



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