Class 2 NIC are you paying your dues?

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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