A property rental business will either be viewed as a business or an investment business. A self-employed person operating a property rental business who is subject to income tax will also have to pay NIC if it can be demonstrated that the activities being carried out amounts to the running of a business.
Operating a rental property business requires a level of activity for it to be classed as a business. The activities include collecting rents, advertising for tenants, carrying out maintenance and repair works etc. This itself does not lean towards a business being run. A property owner can only be considered a self-employed earner where additional management activities are carried out beyond those generally associated with a landlord.
Where an individual owns multiple properties and is looking to grow the portfolio and it is the taxpayer’s main occupation, it could be pointers that a business is in place for NIC purposes.
How much you pay
You usually pay 2 types of National Insurance if you are self-employed.
Class 2 if your profits are £6,735 or more and year and Class 4 if your profits are £9,881 or more a year.
Class 2 – £3.15 a week
Class 4 – 10.25% on profits between £9,881 and £50,270, 3.25% on profits over £50,270.
Most people pay Class 2 and Class 4 NIC through Self-Assessment.