Class 2 NIC Payments
Listed Under: Blog
Are you wondering why your class 2 NIC payments have stopped?
Self-employed people who are liable to pay national insurance have to pay Class 2 National Insurance Contributions. In 2015/16 HMRC collected these payments by monthly or quarterly direct debits equating to £2.80 per week. However you may have noticed
that the payments have stopped.
Unfortunately the payments stopping doesn’t mean that you no longer have to pay Class 2, it’s just that HMRC have changed the way that they collect the tax for 2016/17. For this tax year onwards the Class 2 liability will be added to your year-end self-assessment tax liability, with the payment due to be received at HMRC by 31 January 2018.
Whilst arguably less convenient for spreading the payment over the year the new tax collection method does yield an advantage to low earners. For 2015/16 and previous tax years self-employed individuals earning less than the small profits threshold (£5,965 for 2015/16) could apply to HMRC for a Small Earnings Exception to avoid paying Cass 2. For 2016/17 onwards this separate application will no longer be required; if your earnings for the year are
below the threshold then no Class 2 will be due.
Get in touch if you think that you may have overpaid class 2 in previous tax years,
we may be able to help you get a refund.
Get in touch here