An illustration of employees waiting for their wages

Class 2 National Insurance Contributions

You should now have noticed that your Direct Debits to HMRC for Class 2 National  Insurance (NIC) have stopped. This is because HMRC now intend to collect Class 2 National Insurance alongside Class 4 NIC’s with your Self Assessment Tax liability.  Class 2 NIC’s for the 2015/16 tax year will be collected via Self Assessment from April 2016.

The amount of Class 2 NIC’s due will be calculated based on the number of weeks of self employment in the year which will be determined from the completion of the Self Assessment Tax return.

Those with no profits chargeable to tax or with profits below the new Small Profits Threshold ( £5,965 in 3015/16) will no longer have to apply in advance for exemption. Where no liability arises at the end of the year a mechanism will be put in place to allow voluntary contributions to be made by the taxpayer where other automatic allowances (such as parental responsibility determined by the receipt of child benefit) do not apply.

For those who do not want to pay everything in one go HMRC will be offering a method for spreading the payments across the year.