Tax & admin · 30 March 2017

Low-paid self-employed urged to pay Class 2 NICs before it’s too late

Class 2 NICs
Low earners can make voluntary payments Class 2 NICs to boost their National Insurance record
Tax campaigners have advised self-employed workers earning below the Class 2 NICs threshold to make voluntary payments before it is abolished in April 2018.

Class 2 National Insurance contributions (NICs) are paid at a flat rate of 2.80 per week by self-employed workers with annual turnover above 5, 965.

Self-employed and freelance workers earning beneath the threshold arent required to pay Class 2 NICs, but voluntary payments build entitlement to the state pension and benefits such as the employment and support allowance (ESA).

The Low Incomes Tax Reform Group (LITRG), a charity that lobbieshMRC on tax policy, urged low earners to make payments now and accumulate vital NI credits for state benefits in the future. The campaign group stressed the excellent value for money? that Class 2 NICs represent for those with smaller profits.

As of April 2018, low earners will be able to make voluntary contributions to Class 3 NICs, but at 14.10 per week marks a significantly higher cost.

In a statement, Anthony Thomas, chairman of LITRG, encouragedthose with earnings under the threshold to exercise their right to make payments.

any self-employed worker on low profits who wishes to make the most of the remaining opportunity to secure a full state pension and other contributory benefits should seriously consider paying Class 2 voluntarily for the last two years of its existence, if they are not already doing so, he said.

Thomas added that HMRC would still accept contributions for previous years if payments had not been made.

they should also carefully check their National Insurance record for the past six years to ensure there are no gaps and, if there are gaps, to plug them by exercising their right to make back-payments of Class 2 in the relevant years.


 
TAGS:

ABOUT THE EXPERT

Praseeda Nair is the editorial director of Business Advice, and its sister publication for growing businesses, Real Business. She's an impassioned advocate for women in leadership, and likes to profile business owners, advisors and experts in the field of entrepreneurship and management.

Business Advice