April 4th, 2013: HMRC has announced that, for financial year 2013/14 onwards, all sleeping partners and limited partners will henceforth be liable to class 2 and class 4 national insurance (NI) contributions. For 2013/14, class 2 is levied at a flat rate of £2.70 per week but is subject to various exceptions, while class 4 is levied at 9% on tax profits between £7,755 - £41,450, and 2% thereafter. Previously, the view has been that - as these types of partner are not involved in the running of a partnership - they were not self employed earners and so not within the remit of national insurance.

Thompson Taraz's Tax Director, Gerald Atwell, said: "It is surprising that HMRC has announced this without any prior notice or consultation. In practice, many investors in limited partnerships are unlikely to be troubled by this development given the various exceptions for class 2 contributions and the lower earnings threshold for class 4 contributions. Notwithstanding this, I would expect HMRC to be put under some pressure from the tax profession generally and the funds industry in particular given the widespread use of Limited Partnerships and Limited Liability Partnerships as investment vehicles."