Losses and Class 2 National Insurance

I have just started my own business and my business plan is projecting losses for the first year. Should I pay Class 2 National Insurance?

1st June 2013

Class 2 National Insurance (NI) is payable by the self-employed at a flat-rate; regardless of profit levels. Class 2 NI counts towards your entitlement to certain benefits, like the basic State Pension, Maternity Allowance and Bereavement Benefit.

If you earn less than a certain limit (currently £5,725 for 2013/14) you can apply for a Certificate of Small Earnings Exception and not pay Class 2 NI.

However, unless you pay NI on other income such as employment income, you might decide to carry on paying them voluntarily to maintain your entitlement to the State Pension and other benefits.

Should you have any queries regarding this or any other matter, please feel free to contact your local TaxAssist Accountant.

By Jo Nockels

Disclaimer: The information provided is based on current guidance (at date of publication) from HMRC and may be subject to change. Any advice shared here is intended to inform rather than advise. Taxpayer's circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this information, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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