Class 2 National Insurance Contributions (NICs) are paid by all self-employed taxpayers unless they qualify for the small earnings or other exemptions. Class 2 NICs are payable at a flat weekly rate. The rate for 2012-13 is £2.65 per week.
Class 2 NICs count towards certain benefits such as:
- The basic state pension
- The employment and support allowance.
- Maternity allowance, and
- Bereavement benefits.
However, the contributions do not usually apply to the following benefits:
- The additional State Pension
- Statutory Sick Pay, or
- Jobseeker’s Allowance.
An exception applies to share fishermen. The share fisherman rate is currently £3.30 per week (2012-13) and the contributions count towards the jobseekers allowance.
The following individuals do not have to make Class 2 contributions:
- Those aged under 16
- Those over the current state retirement pension age
- Married women or widows who are entitled to pay reduced contributions.
Individuals that earn less than £5,595 per year can apply for a small earning exemption, if successful, no contributions are due.
If you have any queries regarding national insurance contributions, please give me a call.
Sue Stephens, Personal Tax Consultant
