‘Sleeping’ and Inactive Limited Partners Must Pay NICs

HM Revenue and Customs (HMRC) have announced a change in treatment regarding the law covering National Insurance Contributions (NICs) as it applies to ‘sleeping’ and inactive limited partners.



HMRC now consider that sleeping partners and inactive limited partners are – and have in the past been – liable to pay Class 2 NICs as self-employed earners and Class 4 NICs in respect of their taxable profits.



Those who have not paid Class 2 or Class 4 NICs for a past period will not be required to do so.



Class 2 NICs are due from 6 April 2013 unless a sleeping or inactive limited partner is under 16 or over pension age, is granted the small earnings exception, is a married woman or widow with reduced liability or claims deferment on account of other employment.



Sleeping and inactive limited partners should account for Class 4 NICs liability, if any, for the 2013/2014 tax year of assessment and for subsequent tax years.



Anyone to whom this announcement applies who is not already paying Class 2 NICs must advise HMRC according to their individual circumstances, even where they qualify for one of the exceptions.



You can register for Class 2 NICs and self-assessment online.