ARTICLE · 22 MAY 2013

NICs For Sleeping And Inactive Limited Partners

Smith & Williamson

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From 6 April 2013, sleeping and inactive limited partners will be required to pay class 2 and class 4 national insurance contributions (NICs).

United KingdomTax

Karen Knapp

From 6 April 2013, sleeping and inactive limited partners will be required to pay class 2 and class 4 national insurance contributions (NICs).

Following a change in its interpretation of the law, HMRC now consider that sleeping and inactive limited partners are liable to pay class 2 NICs as they are "gainfully employed" as self employed earners and class 4 NICs because the persons making up the partnership (whether general, sleeping or limited partners) will all be "carrying on a business in common with a view of profit".

All sleeping and inactive limited partners will therefore now be required to:

Advise HMRC of their self-employed status using form SA401 and, if not already doing so, arrange to pay class 2 NICs from 6 April 2013 or seek exception/deferment.

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