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HMRC internal manual

Debt Management and Banking Manual

From
HM Revenue & Customs
Updated
, see all updates

Debt and return pursuit: NIC: Class 2 NICs: what are Class 2 NICs?

Class 2 NICs are weekly flat rate contributions, paid by self-employed earners for every week or part of a week in which they are self-employed. They provide entitlement to some benefits depending on the contributions paid.

Who is liable to pay Class 2 NICs?

Section 11 of the Social Security Contributions and Benefits Act 1992 and the Social Security Contributions and Benefits Act Northern Ireland 1992, requires Class 2 contributions to be paid by everyone who is:

  • self-employed
  • aged 16 or over
  • below State Retirement Pension age
  • not exempt from liability.

Although the term “self-employment” is not defined in legislation, the term “self-employed earner for NICs purposes” is (see S2 (1) SSCBA 1992).

Where a person has two (or more) concurrent occupations, as both an employee and a self-employed person they are liable for Class 2 NICs in addition to any Class 1 NICs up to an annual maximum.

Exemptions from paying Class 2 NICs

A self-employed person can be exempt from Class 2 liability in certain circumstances. For example:

  • small earnings
  • where self employment is a subsidiary activity
  • where a self employed person is in receipt of:

    • incapacity benefit
    • carers allowance
    • maternity allowance.

Further enquiries

Any enquiries about entitlement to exemption should be addressed to

HMRC
NI Contributions Office
Self Employment Services
Customer Account Section
Benton Park View
NE98 1ZZ.

Rate of debt

If you need to know the rate of debt then please refer to the National Insurance Contribution Table on the Class 2 NICs website.

Registration of self employment

Customers are required to notify HMRC within three months of self-employment commencing. SES Penalties Section at NICO may impose a fixed Late Notification Penalty (LNP) of £100 where a person fails to register self-employment within three months.