Class 2 National Insurance Contributions (NICs) are paid by self-employed taxpayers and members of partnerships if their annual profits are over £6,025. Class 2 NICs are payable at a flat weekly rate currently, £2.85. Class 2 NICs count towards payments such as the state retirement pension, the employment and support allowance, maternity allowance and bereavement benefits. The withdrawal of Class 2 NICs was due to take place from April 2018 but has now been delayed until April 2019.

The collection of Class 2 NICs changed with effect from the 2015-16 tax year and is now made through the existing self-assessment system together with income tax and Class 4 NICs. A liability to Class 2 NIC should be reported on an individual’s self-assessment tax return and any payment of Class 2 NICs relating to 2016-17 will become due on 31 January 2018. The option to make a monthly payment is no longer generally available, however it is possible to set-up a Budget Payment Plan and continue making payments in instalments.

Planning note

A limited number of self-employed taxpayers don’t pay tax through self-assessment (such as a non-UK resident who’s self-employed in the UK). If this is the case, HMRC should contact you to make separate payment arrangements.