Class 2 National Insurance contributions liability: Payment methods: Payment dates - Effect on state pension
Regulation 1(2), 4 and 7(1)(a) of the Social Security (Crediting and Treatment of Contributions and National Insurance Numbers) Regulations 2001 (SI 2001 No 769)
Providing National Insurance contributions (NICs) are paid by the due dates of 31 January and 31 July by those liable to pay Class 2 NICs, whether by Direct Debit (DD) or in response to payment requests, the late payment and extra late provisions, which can affect a person’s entitlement to benefits, (see NIM23001), do not apply.
The payment for any periods of liability in the second half of the contribution year, if not paid monthly by DD, are due to be collected in the July following the end of the contribution year. If a person pays monthly by DD they will pay for the periods of liability in the last four months of the year from April to July after the end of the year in which Class 2 NIC liability arose.
Payment of Class 2 NICs after the end of the year in which liability arose, may impact on entitlement to Basic State Pension (BSP). This is illustrated in the example below. If a person in this situation wants to pay the Class 2 NICs immediately after the end of the year for which they were due but before the due date of payment, they should be allowed to do so. But they should not pay in advance of a period of liability because that liability may not arise.
Man reaches state pension age (SPA) on 10 June 2012.
Last tax year used for BSP is 2011/12 (the tax year ending before the man’s SPA).
Man chooses to pay Class 2 NICs for the 2011/12 contribution year twice a year, in January 2012 and July 2012.
The NICs paid in July 2012 get recorded on the National and PAYE Service (NPS) system shortly after they are paid but after the man reaches SPA.
If the 2011/12 year becomes a qualifying year for BSP when the Class 2 NICs due for the period of liability in the second half of the contribution year are paid, paying those NICs in July 2012 may impact the man’s entitlement to BSP from SPA. Once the NICs collected in July 2012 are recorded on his NPS account, assuming they are collected by that due date, the man’s BSP should be recalculated and any arrears paid.
The payment request for the NICs due for the second half of the 2011/12 contribution year will be issued in April 2012. The man could choose to wait until 31 July 2012 to pay for the NICs or he may wish to pay as soon as he gets the payment request.