21 Nov Class 2 National Insurance – What You Need To Know
If you are self-employed and earn above the 2018/19 small profits threshold of £6,205 per annum then you are required to pay Class 2 National Insurance of £2.95 per week. The exact amount payable is determined when you complete your self assessment tax return and is paid alongside your income tax.
Class 2 NI entitles you to a state pension, maternity allowance, bereavement benefits, widowed parent’s allowance and short-term contributions based employment and support allowance.
Voluntary contributions can be made if your profits are below the threshold to ensure you remain entitled to the above.
The Government’s original plan was to abolish all Class 2 completely from April 2018 which was then delayed until April 2019.
However, an announcement has been made this month (September 2018) by the Exchequer secretary to the Treasury that the Government will not proceed with the changes.
This is due to the fact that voluntary contributions to maintain access to state pension would need to rise substantially therefore negatively impacting on self-employed individuals with low profits.
There are currently no plans to reintroduce the abolition at this time.
If you have any questions about your self employment and national insurance contributions please fill out the form below or call us on 01254 583515.