Class 2 National Insurance Contributions
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Class 2 National Insurance Contributions (NICs) are payable by self employed people at a flat rate of £2.50 per week (2011/12), however, if your earnings are below £5315 you may be exempt from paying them or may make a claim for a small earnings exemption. If this applies, you may still wish to make voluntary contributions so as not to affect entitlement to pension or other benefits.

You must notify HMRC when you commence self employment so as to be registered for national insurance purposes and ensure income tax returns are issued. You will also be liable for Class 4 NICs.

You are exempt from paying Class 2 NICs if you are under 16 or have reached state pension age, you are a married woman or are a widow who is entitled to pay reduced contributions, you have a small earnings exemption and you may be excempt for weeks where you could not work subject to certain conditions.

Class 2 NICs can be paid monthly or six monthly by Direct Debit. From April 2011, if you pay 6 monthly, they are due with your self assessment tax payments i.e 31st January and 31st July.

If you do not pay by the due dates, they may become chargeable at a higher rate and affect your entitlement to contributory benefits.

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