Unfortunately, just because you have contributed enough National Insurance to qualify for your state pension, this does not mean that you can stop paying National insurance if you have not yet reached pensionable age.
There are two classes of National Insurance that are applicable to self-employed individuals, Class II which is sometimes called the 'weekly stamp' and Class IV which is levied on profits if they exceed a certain amount.
Class II National Insurance Contributions must be paid until the earlier of the date on which you cease to trade, or the day on which you reach the qualifying age for state pension. For those individuals who have a low income, it is possible to apply for a small earnings exemption from Class II.
Class IV National Insurance Contributions are computed according to the net profit each year on your self assessment tax return. The final liability for Class IV Contributions falls in the tax year you cease to trade, or the year you reach the qualifying age for state pension.
National Insurance is a complex area of legislation, particularly for individuals who are required to pay more than one class. If you have any queries concerning your liability to pay National Insurance, please consult your local TaxAssist Accountant.
By Jo Nockels
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