Class 2 NIC to Continue for Self-Employed

In 2016 the government consulted on a proposed abolition of Class 2 National Insurance Contributions (NICs) for the self-employed. This flat rate contribution, currently £2.95 a week is payable by the self-employed in addition to Class 4 contributions based on the level of profits.

The flat rate contributions were due to cease on 5 April 2019 but will now continue “for the life of this parliament”.

The reason for the u-turn concerns business owners with low profits or making losses. In order to maintain their NI Contribution record, many self-employed individuals voluntarily continue to pay Class 2 contributions despite their profits being below the £6,205 small earnings exemption. Having a full NI contribution history helps maximize an individual’s entitlement to State Benefits. For example, full State Pension entitlement requires 35 years contributions.

With the abolition of Class 2 NICs, those with low profits or making losses would need to make voluntary Class 3 contributions (currently £14.65 a week, £761.80 a year) in order for that year to count as a contribution year.

 Check your Contribution History

As mentioned above, in order to maximise entitlement to full State Benefits a full contribution record is required. It is possible to check your National Insurance record online to see:

  • what you’ve paid, up to the start of the current tax year (6 April 2018)
  • any National Insurance credits you’ve received
  • if gaps in contributions or credits mean some years don’t count towards your State Pension (they aren’t ‘qualifying years’)
  • if you can pay voluntary contributions to fill any gaps and how much this will cost

Visit your National Insurance record online here: https://www.gov.uk/check-national-insurance-record

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