Class 2 NICs
A number of changes to the rules and penalties for notifying Class 2 NIC’s come into effect from 6 April 2009.
Class 2 NIC’s are paid by the self-employed. Currently a self-employed tax payer must notify HMRC within three months (from the end of the first month) of assuming this status. Otherwise, a £100 penalty is levied.
The new rules will require a taxpayer who becomes or ceases to be liable to pay Class 2 (or Class 3) NICs to notify HMRC immediately they commence self employment.
Penalties will be applicable where taxpayers do not notify their liability for Class 2 NICs by 31 January after the end of the tax year in which they become liable. No penalty will be levied if there is a reasonable excuse for the failure to notify. In all other cases penalties ranging from 30% to 100% of the missing contributions can be levied. This structure mirrors the new penalty rules in FA 2007 and FA 2008.