Changes to National Insurance for the self-employed

Sep 15, 2015

Being self employed you are liable for both class 2 and class 4 National Insurance.


Class 2 is traditionally paid at a flat rate per week (£2.80) and has been collected monthly or 6 monthly by direct debit, and Class 4 is payable at 9% on the profit of you business over £8,060. Class 4 is collected along with your income tax at 31 January.


If you had small earnings (under £5,965) then you could apply for an exemption from playing Class 2 NIC.


From 6 April 2015 the rules have changed.  Class 2 NIC is now payable like Class 4 NIC in one go at the 31 January after you have filed your tax return.  For small earnings, Class 2 is only payable if your profit is above the threshold; there is no need to apply for an exception anymore.


For those currently paying class 2 by DD, the payments are collected 4 months in arrears, so the last payment should have been July 15 – make sure HMRC are not continuing to collect it!


Class 2 payments do count towards the state pension and other benefits, so if you do have small profits, voluntary contributions of Class 2 NIC may be worth considering.


For more information, please contact Rosie Forsyth at Wilkins Co.