NIM73000 | Class 2 National Insurance contributions from 6 April 2015: Small Earnings Exceptions

Regulations 46 and 47 of the Social Security (Contributions) Regulations 2001 (SI 2001 No. 1004) (repealed)

Periods up to and including 5 April 2015

A person whose net earnings from self-employment were, or were treated as being, less than the SEE limit fixed for the relevant tax year could claim exception from liability to pay Class 2 NICs.

Where applicable, applications for SEE refunds could be claimed for the 2014 to 2015 tax year up to 31 January 2016.

Refunds

If a self-employed contributor had paid Class 2 NICs for the 2014 to 2015 tax year when they satisfied the conditions for a SEE, then a refund of those contributions could be claimed for that year or any part of that year, subject to the following:

• refunds could only be made for periods from and including 6 April 2014 to 5 April 2015

• applications had to be made on or before 31 January 2016, and this time limit could not be extended.

• applications had to be in writing and evidence of earnings provided (it may not always have been in a person’s best interests to obtain a refund of Class 2 NICs on the grounds of low earnings and they should have been advised about the benefit implications)

If an application was successful:

• the applicant was excepted from liability for the relevant period

• a refund of contributions was made, and

• a certificate of exception was issued for the period covered by the refund

If contributory benefits had been paid to the self-employed person or to anyone else based on the original Class 2 NICs, then the amount of the refund should have been reduced by the amount of benefit paid.

For more information about SEE, see NIM21000.

From 6 April 2015 to 5 April 2022

Class 2 NICs will be payable annually through the Self Assessment system. A Class 2 NICs liability will only arise where the self-employed earner has relevant profits of or exceeding the Small Profits Threshold (SPT) – see NIM70300. Therefore the Small Earnings Exception (SEE) will no longer apply.

From 6 April 2022 to 5 April 2024

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).

Where the self-employed earner has relevant profits from the SPT to the LPT they will be treated as having actually paid Class 2 NICs.

From 6 April 2024 onwards

From 6 April 2024 the Class 2 Lower Profits Threshold was removed which means that liability to pay Class 2 NICs no longer exists from tax year 2024 to 2025 onwards. A self-employed earner with profits equal to or above the SPT is treated as having actually paid Class 2 NICs.

A self-employed earner with profits below the SPT can still choose to pay Class 2 voluntarily.