· undertaking or arranging for external and internal repairs,
· preparing the property between lets,
· advertising for tenants and arranging tenancy agreements,
· generally maintaining common areas in multi-occupancy properties, or
· collecting rents.
· Letting property may amount to being in business, but if it does not, there is not (and never has been) a liability or entitlement to pay Class 2 NIC.
· If letting property does amount to a business, but not a trade, it makes the landlord a self-employed earner eligible to pay Class 2 NIC (he or she would have been liable to pay Class 2 before 6 April 2015).
· Where the letting business is also a trade because it includes more than property letting, the profits are liable to compulsory Class 2 and Class 4 if the trading profits exceed the relevant thresholds.
Capital Gains Tax relief for running a business from the premises on disposal. This may compensate a little for loss of indexation relief.
1. The absentee or holiday home owner letting a single property is generally unlikely to be in 'business' as a landlord, so there should be no Class 2 eligibility or liability.
There was a Special Commissioners case 13 years ago, Rashid v Garcia, where it was decided that a man who let four properties (one residential, one student and two commercial) was not in business and was therefore not classed as self-employed for NIC purposes, but it turned on the facts. Mr R had been a taxi driver but was incapacitated and gave up work, living off the rents and spending only about 8 hours per week on being a landlord. He wanted to be able to pay Class 2 to maintain his right to contributory incapacity benefit. As a property owner, he presumably would not have qualified for means-tested IB.
2. There is no definition of 'business' in the NIC legislation, so the points made by HMRC about what makes letting into a business should presumably be a matter of general interpretation. You are presumably thinking of the judge's comments in the EM Ramsay case about the landlady with ten flats in Belfast who spent 20 hours per week on managing them and had no other occupation? It might be that very decision that prompted the reform of liability in NICA 2015 and the way the rules are described in the latest manual update.
Both cases were odd. If the let properties in each case had been owned by a company, there would have been no dispute about the company carrying on a letting business, but HMRC challenged the existence of a 'business' when they were held by individuals.
Will this definition of " business" for letting activities also apply for incorporation relief ( TCGA 1992, s 162) ?