Sleeping partners and national insurance

In the past sleeping partners and inactive partners didn’t have to pay National Insurance contributions on their partnership profits. However, HM Revenue & Customs changes its view on this in April 2013 and it now considers that all partners are liable to pay National Insurance contributions in respect of their taxable profits, whatever their level of activity within the business. The implications for inactive and sleeping partners are:

  • if not already registered as self-employed, the person must register with HM Revenue & Customs and arrange to pay class 2 National Insurance contributions from 6th April 2013;
  • exemptions from paying class 2 National Insurance contributions can be claimed if the taxable profits are low, or the individual has another employment; and
  • class 4 National Insurance contributions will be due on their profits from 2013/14 onwards and will be collected through the normal self-assessment for 2013/14.