Class 2 National Insurance (NI) is payable by the self-employed at a flat-rate; regardless of profit levels. The rate for 2017/18 was £2.85 per week. 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 the Small Profits Threshold (£6,025 for 2017/18), you are automatically exempted from paying Class 2 NI. The exemption applies according to what figures you submit on your tax return, so separate claim needs to be made.
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. In this case, the individual can opt to pay Class 2 NIC voluntarily to protect their entitlement to benefits.
Deciding on whether to pay Class 2 NI is investment advice, which is a regulated area. If you're unsure, please seek investment advice.
If you'd like any support with your tax affairs, please feel free to contact 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.