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HMRC internal manual

National Insurance Manual

Class 2 National Insurance contributions: Small Earnings Exception: Special Groups: Sub-Postmasters & others who include Class 1 earnings in the trade receipts of their business

Regulation 45(2)(b) of the Social Security (Contributions) Regulations 2001 (SI 2001 No 1004)

Many sub-postmasters supplement their Post Office salary by operating a general trade in the same premises. They may pay their Post Office salary into their business account. This is in order to benefit from special tax arrangements which allow more favourable treatment of expenses where the salary is taxed under schedule D rather than schedule E. For further details see ESM4400.

Before 6 July 1994 sub-postmasters whose profits from their retail sales were below the SEE limit for Class 2 contributions were adversely affected by this practice as the inclusion of their earnings from the Post Office in their business accounts invariably took them over the SEE limit. This meant that income already subjected to Class 1 contributions also denied entitlement to exception from Class 2 liability.

From 6 July 1994, earnings from employment as an employed earner which are shown in the accounts of the business as a receipt of that business are disregarded for the purposes of establishing entitlement to SEE.