NIM70300 | Class 2 National Insurance contributions: general information: relevant profits below the Small Profits Threshold (SPT)

Section 11(2) of the Social Security Contributions and Benefits Act (SSCBA) 1992

From tax year 2015 to 2016 Class 2 National Insurance contributions (NICs) are assessed, calculated and payable annually through the Self Assessment (SA) system.

Relevant profits are used when determining whether a Class 2 NICs liability exists, and are those profits in respect of which Class 4 NICs are payable under section 15 of SSCBA 1992.

Up to 5 April 2022 a Class 2 NICs liability only arose where the self-employed earner had relevant profits equal to or above the small profits threshold (SPT). This removed the need for the self-employed earner to apply for a small earnings exception (SEE), which is no longer available from 6 April 2015.

From 6 April 2022 a Class 2 NICs liability only arises where the self-employed earner has relevant profits exceeding the Lower Profits Threshold (LPT).

From 6 April 2024 the LPT was removed which means that liability to pay Class 2 NICs no longer exists. Where the self-employed earner has relevant profits at or above the SPT, they will be treated as having actually paid Class 2 NICs.

Where a self-employed earner does not have relevant profits or their relevant profits are below the SPT, Class 2 NICs can be paid voluntarily to protect entitlement to State Pension and certain benefits.

Those with relevant profits below the SPT can choose to pay Class 2 NICs voluntarily when completing their SA tax return. If they do not have relevant profits they can pay outside of SA.

For more information on payment, see NIM72000.