Important Changes to Self-employed National Insurance Contributions

8 March 2016

The way that class 2 National Insurance is paid has changed with an important impact for the self-employed on low incomes.

Class 2 National Insurance payments qualify you for contributions-based benefits such as the State Pension. Previously contributions were paid by Direct Debit either monthly or six monthly, now they are collected along with income tax and class 4 National Insurance with the annual self assessment tax return.

In most cases there is no need to do anything further, however there is an important exception to note for those below the low income threshold – currently a profit of £5,965 per annum.

Those below the low income threshold will not automatically pay class 2 National Insurance but may well wish to do so on a voluntary basis in order to be eligible to claim contributions-based benefits. This is done on an opt-in basis so it is essential that you tick the box on your 2016 self assessment tax return as otherwise nothing will be collected and no entitlement will be created.

The new regulations apply from 2015/16. 31 January 2017 is the due date for payment of the class 2 contributions and the final date for submission of the 2015/16 online self-assessment tax return. Those on low incomes and not yet registered for self assessment may want to consider doing so sooner to preserve their immediate benefit rights – see Once you are registered for self-assessment you can set up a Budget Payment Plan to spread the cost.

SoA members with questions about this, or other tax matters, can take advantage of our free tax helpline.