Scrapping class 2 NI in 2019

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    Scrapping class 2 NI in 2019

    Currently I understand an individual whose sole income is through renting properties is exempt from national insurance.

    With the scrapping of class 2 next year is this likely to result in landlords in the above situation having to pay class 4 ni?


    #2
    A long time since I looked at this so might be well out of date or totally wrong.
    My understanding is that class 2 contributions were/are voluntary for landlords. Not out of the goodness of HMRC's heart but because if they made it compulsory, then they would also have to give all the entitlements and benefits of running a 'pure' business.
    So I can't see class 4 contributions becoming compulsory next year although they probably will be allowed voluntarily.
    Might be worth topping up now at the lower class 2 rate if less than 30 years contributions to get a better pension.

    Comment


      #3
      I suspect pensions will be means tested by the time I get there. (14 years) In view of that, there seems little point in contributing anything at all.

      Comment


        #4
        Originally posted by JK0 View Post
        I suspect pensions will be means tested by the time I get there. (14 years) In view of that, there seems little point in contributing anything at all.
        In view of an unlikely suspicion you are going to miss out on one of the best investments you can make?
        Class 2 contributions are £2.95 per week, paying out nearly double that at retirement age, index linked, for the rest of your life.
        Check out comparable annuity rates.

        Comment


          #5
          Originally posted by boletus View Post

          In view of an unlikely suspicion you are going to miss out on one of the best investments you can make?
          Class 2 contributions are £2.95 per week, paying out nearly double that at retirement age, index linked, for the rest of your life.
          Check out comparable annuity rates.
          So I pay them £3 a week for 30 years, and maybe get £6 a week for 15 years if I live to 82?

          I'll stick with the properties, I think.

          Comment


            #6
            Originally posted by JK0 View Post

            So I pay them £3 a week for 30 years, and maybe get £6 a week for 15 years if I live to 82?
            No, you get £164.35 a week, index linked. Like having another rental property but none of the work.

            Chances are you've already contributed quite a few years from previous employment but maybe need to add a couple of years to get the full entitlement. At the lower class 2 rate of £2.95, it's a bargain. This is a last chance to take advantage before they remove it.

            Strongly recommend you look into it properly.

            I'll stick with the properties, I think.
            Do both.

            Comment


              #7
              So if class 2 are disappearing next year what class would a landlord who wanted to pay voluntary contributions pay? Would it be class 3?

              Comment


                #8
                Don't know Paul, I think it is still to be decided. It's an interesting subject you've raised that seems to have slipped under the radar.
                It should be class 4 IMHO but that would create all sorts of difficulties for HMRC, so maybe they will go for the class 3 easy option.
                So effectively a stealth tax on landlords of the difference between class 3 and class 2 contributions;

                £14.65 - £2.95 = £11.70 per week
                30 years x 52 x £11.70 = a tax increase on landlords of £18,252.

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