Class 2 National Insurance Contributions

For the tax year ending 5th April 2016 onwards, Class 2 NICs will be collected through Self Assessment. When individual Self Assessment Tax Returns are completed, the amount of Class 2 NICs due will be calculated based on the number of self-employment weeks worked during the year.

Instead of paying either six monthly or monthly, an annual calculation will be made and the amount due will be payable together with the Income Tax and Class 4 NICs at the end of January the following year, i.e. Income Tax and NICs due for the period ended 5th April 2016 will be payable on or before 31st January 2017.

It may be possible however to spread the cost of the Class 2 NICs and continue making regular payments to HMRC throughout the year by setting up a budget payment plan.

If you fall under the small profits threshold you can still opt out and then voluntarily pay Class 2 NICs in order to protect certain benefits and your State Pension. If you currently hold a Small Earnings Exemption certificate you will not need to renew it for the 2015-16 tax year as self assessment will determine whether your earnings are under the small profits exemption level.

The last direct debit payments taken under the old system would have been collected on 10th July 2015 which covered the period up to 5th April 2015. This means that no Class 2 NIC calculations will be shown in the 2014/2015 Self Assessment Tax Returns.

If you would like assistance with the completion of your Self Assessment Tax Return or would like further information on the above, please contact us.

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