Self-employed individuals whose annual profits are below £6,025 for 2017/18 are not obliged to pay Class 2 National Insurance Contributions. However, voluntary Class 2 contributions (at £2.80 per week) can be made to maintain an individual’s National Insurance record and build up their entitlement to benefits such as the state retirement pension and state maternity/paternity allowances.
From April 2018, Class 2 contributions are to be abolished, and so with it goes the opportunity to secure a state record at this lower rate. Instead, for those who want to continue making voluntary contributions, they will have to pay Class 3 contributions, which at £14.25 per week is five times more expensive!
Note : where no voluntary payments have been made, HM Revenue & Customs do allow ‘back-payments’ of Class 2 contributions for the previous six tax years.
It is therefore vital that any self-employed workers check their National Insurance record and make up any deficiencies before voluntary contributions become much more costly in April 2018 !
For more information, contact Blair Hay, Private Client Taxation Services, firstname.lastname@example.org