NIM70001 | Class 2 National Insurance contributions: general information: introduction

Section 11 of the Social Security Contributions and Benefits Act (SSCBA) 1992 and Section 11 of the Social Security Contributions and Benefits (Northern Ireland) Act 1992

From 6 April 2015 to 5 April 2022

Every self-employed earner (see NIM70100) who:

• has reached age 16, and

• has not reached State Pension age, and

• satisfies the prescribed conditions of residence or presence in the United Kingdom (see NIM70050)

is required to pay Class 2 National Insurance contributions (NICs) where the earner has relevant profits equal to or above the Small Profits Threshold (SPT section 11(2) SSCBA 1992) – see NIM70150. For those self-employed earners with relevant profits below the SPT or who have no relevant profits, such earners will be eligible to pay voluntary Class 2 NICs (section 11(6) SSCBA 1992) – see NIM70300.

From the 2015 to 2016 tax year, for most self-employed earners, Class 2 NICs will be assessed, calculated and payable annually through the Self Assessment system. However, there will be exceptions to this – see NIM70550 (Regulation 43 of the Social Security (Contributions) Regulations 2001).

NIM72000 explains how Class 2 NICs can be paid.

Any Class 2 NICs due for tax years from 6 April 2015 which are collected through the Self Assessment system and are late paid:

• will be subject to late payment interest and penalties,

• and late payment may adversely affect entitlement to contributory benefits - enquiries about how benefit is affected by late payment should be referred to DWP

In circumstances where a self-employed earner was employed for a period before 6 April 2015 but failed to inform HMRC, NIM20000 onwards will apply in respect of the period up to and including 5 April 2015.

Spring Statement 2022

From 6 April 2022, the level at which people start to pay Class 2 NICs was increased to align with the Income Tax Personal Allowance.

A new threshold was introduced for Class 2 NICs, the ‘Lower Profits Threshold’ (LPT).

• If a person’s profits are less than the SPT, or they made a loss, they can choose to pay Class 2 NICs voluntarily to protect entitlement to State Pension and certain benefits. This has not changed.

• If a person’s profits are from the SPT to the LPT, they will not need to pay Class 2 NICs, their contributions are treated as having been paid to protect entitlement to State Pension and certain benefits.

• If a person’s taxable profits are more than the LPT they must pay Class 2 NICs.

Autumn Statement 2023

From 6 April 2024, the LPT was removed which means that liability to pay Class 2 NICs no longer exists.

• If a person’s profits are less than the SPT, or they made a loss, they can choose to pay Class 2 NICs voluntarily to protect entitlement to State Pension and certain benefits. This has not changed.

• If a person’s profits are at or above the SPT, they are treated as actually having paid Class 2 NICs to protect entitlement to State Pension and certain benefits.