Posted by jonathanfullarton - February 4, 2015 11:05 am Class 2 NICs collection simplified

The government announced in the 2014 Budget that Class 2 National Insurance Contributions (NICs) will be collected through the self assessment system, in line with Class 4 NICs, for the 2015/16 tax year onwards. Unfortunately, there will be no monetary savings to be made by this change over, but its implementation, however, is aimed at saving sole traders and partnerships the administrative task of paying under two different collection methods.

Small Profits Threshold

As the Class 2 NIC liability will now arise alongside the income tax and Class 4 NIC liability, there is no need for those with profits under the new Small Profits Threshold (equivalent to the current Small Earnings Exception Threshold), or with no profits at all, to apply in advance for their exception. Instead, there will be an option at the end of the year to make voluntary contributions.

Budget Payment Plan

For those who prefer to make regular payments, rather than leaving the liability in full until the end of the year, the Revenue will be retaining this system. A Budget Payment Plan (BPP) will only be available to those who are up to date with their payments. A BPP can be set up at any time using your HMRC online account.

More information will be sent out from the Revenue in due course. Please note that this change will not affect the way NICs are collected for employees.

If you have any queries with regards to your personal tax affairs then contact a member of your local MFW office who will be pleased to help.