Class 2 National Insurance Contributions
Class 2 National Insurance Contributions (NICs) are paid by all self-employed taxpayers unless they qualify for the small earnings exemption or other exemptions which remove the necessity to pay NICs. Class 2 NICs are payable at a flat weekly rate. The rate for 2013-14 is £2.70 per week.
Since April 2011, payments for Class 2 NICs become due on 31 January and 31 July, the same dates as those of a Self Assessment tax bill. The latest Class 2 NICs payment request will be issued this month and is due to be paid by 31 January 2014. The next payment request will be issued in April 2014 and is due for payment by 31 July 2014.
The self-employed can continue paying monthly by direct debit or six monthly on the actual payment due dates. Class 2 NICs count towards payments such as the basic state pension, the employment and support allowance, maternity allowance and bereavement benefits.
There are special rules for self-employed individuals who earn less than £5,725 per year. An individual earning less than this amount can apply for a Certificate of Small Earnings Exception (SEE). However, in certain circumstances, an individual may decide that it is beneficial to make voluntary Class 2 NIC payments, even for those periods which are covered by an SEE. The voluntary contributions can be used to fill in gaps in an individual’s National Insurance record and to ensure that sufficient payments have been made in order to claim certain benefits such as the basic state pension.