The self employed pay 2 types of National Insurance:
- Class 4 which is dependent upon the level of profits and is collected through via the tax return
- Class 2 which is a fixed amount
In the past, Class 2 National Insurance has typically been collected from taxpayers via Direct Debit. But from April 2015, Class 2 National Insurance will become an annual charge and will be collected via the tax return and the Self Assessment regime.
As your business is just starting out, I would recommend that you seek advice on your affairs. This can make sure you’re claiming everything you’re entitled to and making the most of all the tax planning opportunities you have available.
And crucially this year, if your profits fall below the small earnings level, Class 2 will not fall due. This could lead to gaps in National Insurance records which will have an impact when claiming some state benefits such as the state pension.
If you'd like to discuss this in more detail, please contact us and we'll put you in touch with your local TaxAssist Accountant.
By Jo Nockels
Disclaimer: Advice shared in this blog 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 forum, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.