Due to a re-interpretation of the law, HMRC announced that from 6 April 2013 sleeping partners will be liable to pay National Insurance. Affected persons should consider the following:
- Sleeping and inactive limited partners who are not already paying Class 2 NICs will need to register. They can claim for exception from these contributions if their circumstances allow, for instance if their profit share is below the required limit.
- For 2013-14 and subsequent tax years Class 4 contributions will also arise.
- Sleeping partners who have not paid contributions in prior years will not be required to do so. However they may consider making voluntary contributions to improve their accessibility to benefits.
If you have been treated as a sleeping partner up to 5 April 2013 you should take action to register for Class 2 purposes otherwise you run the risk of incurring penalties.