Ainsworth Accountants: Accounts, Tax and Business Advisors.

Class 2 National Insurance

What is Class 2 National Insurance ?

Class 2 National Insurance Guide

Self-Employed people normally have to pay Class 2 NI contributions.

In certain circumstances you may be exempt.

From the tax year 2015/16 onwards, Class 2 became part of Self Assessment and is not payable separately by monthly or weekly Direct Debit.

For the tax year 2021/22 (6/4/21 to 5/4/22) the Class 2 NI flat rate is £158.60 for the year. However, if your earnings are below £6,515 per year (see below) you might not need to pay.

Class 2 NI is not a business expense so is not allowed as an expense against tax.

Exceptions to paying Class 2 NI

You don't have to pay Class 2 National Insurance contributions if any of the following apply:
• you are under 16
• for any periods after you have reached State Pension age
• your earnings are below a certain level - see 'Small Profits Threshold' below
• full list on HMRC website (link below)

Class 2 NI Small Profits Threshold (SPT)

If your profits are below £6,515 per year (2021/22) you might not need to pay.

You can claim exemption on form CF10

Reclaiming Class 2 NI

If you think you are due a Class 2 refund, there is further information on the link below:
Claim a National Insurance refund

Property Rental Income

Class 2 NI is not normally payable by people who let a small number of properties. This is because property letting in small numbers is regarded as investment not a trade.

Please also see our webpage: Property Rental Income

Class 4 National Insurance

Self-employed people may also need to pay Class 4 National Insurance, which is calculated as a percentage of business profits.

Also Employed? Class 2 Deferment

Where a self-employed person is also employed, they may pay enough NI through their job to reach the maximum NI that a person is required to pay in a year. The amounts change each year.

An application may be made to defer the payment of the Class 2 and Class 4 payments by using form CA72B.

Caution Regarding UK State Benefits

Payment of Class 2 NI counts towards Incapacity Benefit, the basic State Pension, bereavement benefits and Maternity Allowance. Therefore you may wish to ensure that your NI contributions are up to date before deciding to apply for exemptions.

HMRC website quote, "A self employed person is entitled to pay voluntary Class 2 payments, even for periods which are covered by an SEE. They would choose to do this if they want to ensure their entitlement to certain benefits which depend on having a National Insurance payment record."

Government and HMRC Links

National Insurance Overview

Pay Class 2 National Insurance

Class 2 National Insurance contributions

Self-employed tax and National Insurance

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