Paying Class 2 NIC Is Changing
Class 2 NIC (otherwise known as self-employed stamp) is payable by anyone who is self-employed, either as a sole trader or in a partnership. Contributions made count towards certain social security benefits, including pensions, and up until now have been collected separately from income tax, usually by monthly or quarterly direct debit.
In a step on from the announcement last year that arrears of Class 2 would be collected through PAYE codes, HMRC have decided that liability will now be calculated and paid alongside self-assessment tax and Class 4 NIC. As a result, contributions due for 2015/2016 will not become due until 31 January 2017.
The criteria for thresholds and exemptions remains the same, for example, those with small earnings or are of pensionable age are not liable, but everyone will be given the opportunity of making voluntary contributions at the end of the tax year, if they so wish.
From 6 April 2015, the Class 2 NIC rate will rise to £2.80 per week and self-employed individuals should already have received notification of the Revenue’s intention to change how they collect the contributions.
Direct debits and direct billing will cease on 10 July 2015, but more information on the transitional period and how the changes are to be implemented is expected to be released at the start of the new tax year 2015/2016.
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Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.
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