All limited partners to pay Class 2 National Insurance

Sleeping and inactive limited partners will need to check their Class 2 NICs position. Sleeping and inactive limited partners who are not already paying Class 2 NICs as a result of being self-employed must advise HMRC of their self-employed status and arrange to pay NICs or seek exception/deferment, etc, according to their individual circumstances. Many sleeping and inactive limited partners will qualify under one of these exceptions but there is a need to ensure that the appropriate action has been taken.

HMRC now take the view that sleeping and inactive limited partners are liable to pay Class 4 NICs because in order for there to be a partnership for the purposes of the Partnership Act 1890 the persons making up the partnership (whether general, sleeping or limited partners) will all be “carrying on a business in common with a view of profit”. Also, section 15 of the Social Security Contributions and Benefits Act 1992 imposes no requirement that partners have to be active in the business.