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HMRC internal manual

National Insurance Manual

Class 2 National Insurance contributions: general information: relevant profits below the Small Profits Threshold (SPT)

Section 11(2) of the Social Security Contributions and Benefits Act 1992 and Section 11(2) of the Social Security Contributions and Benefits (Northern Ireland) Act 1992

From the 2015 to 2016 tax year, Class 2 NICs are assessed, calculated and payable annually through the Self Assessment system.

A Class 2 NICs liability only arises where the self-employed earner has relevant profits of or above the small profits threshold (SPT). This removes the need for the self-employed earner to apply for a small earnings exception (SEE), which is no longer available from 6 April 2015.

Relevant profits are used when determining whether a Class 2 NICs liability exists, and are those profits in respect of which Class 4 NICs are payable under section 15 of the Social Security Contributions and Benefits Act 1992.

Where a self-employed earner is not liable for Class 2 NICs because they do not have relevant profits or the profits are not at or above the SPT, then Class 2 NICs can be paid voluntarily to protect entitlement to certain contributory benefits.

Those with relevant profits below the SPT will be able to opt to make a voluntary payment when completing their Self Assessment tax return.

Those not liable for income tax under Chapter 2 of Part 2 of ITTOIA 2005 will be entitled to pay Class 2 voluntarily. Once they inform HMRC that they wish to pay Class 2 NICs, they will be sent an annual bill to enable them to do so after the end of the relevant tax year but before the end of October immediately following.

For more information on payment, see NIM72000.