What’s new with Class 2?
9th June 2016No Class 2 payable.
You might have noticed that in mid-2015 HMRC stopped collecting/demanding payment of Class 2 (self-employed) NI contributions. This was not an act of generosity by the government but a change in the way Class 2 NI is collected.
Self-assessment.
In April 2016 the rules changed to allow Class 2 NI to be added to your self-assessment tax bill for 2015/16 (and later years). When you submit your tax return HMRC will calculate any tax and Class 2 payable on 31 January 2017. If you use software to complete your tax return this too will take account of Class 2 NI.
Employed and self-employed.
If you were employed, say as a director, and received a salary of more than £42,285 in 2015/16, you will have paid the maximum NI for that year. Therefore, if you also had self-employed income you aren’t liable to pay any Class 2. In previous years, to avoid having to pay it you had to complete a special form, known as an NI deferment application, and send it to HMRC. The good news is that an application is not required for 2015/16 and later years. HMRC will automatically check if you’ve paid the maximum NI.
If you received income from self-employment in 2015/16, the Class 2 NI contributions payable on this will be added to your self-assessment tax bill that’s payable in January 2017. If you have already paid the maximum NI through your salary HMRC will automatically take this into account.
