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HMRC internal manual

National Insurance Manual

Class 2 National Insurance contributions: payments: voluntary contributions – annual lump sum

Regulation 89 of the Social Security (Contributions) Regulations 2001 (SI 2001 No 1004)

From 6 April 2015, self-employed earners who are not required to pay Class 2 NICs under the Self Assessment system can, in certain circumstances, be entitled to pay voluntary Class 2 NICs.

Regulation 89 enables such contributors to make payment of voluntary Class 2 NICs by an annual lump sum payment.

HMRC will issue a payment request following the end of the tax year, and before 31 October.

Payment of the voluntary Class 2 NICs should be made by the following 31 January. There will be no penalty charge for late payment, although the higher rate provisions could become a factor (see NIM72150). Failure to make payment by 31 January could have a detrimental impact on entitlement to some contributory benefits.

Contributors entitled to pay voluntary Class 2 NICs via an annual lump sum are:

  1. Those not liable to pay Class 2 NICs because their relevant profits are below the small profits threshold (SPT) – see NIM70300

Such self-employed earners will able to pay voluntary Class 2 NICs at the time they submit their Self-Assessment return.  However, should the self-employed earner decide not to pay voluntarily at the time the Self Assessment tax return is filed, they could contact HMRC at a later date and opt to pay via a payment request. This would be an ad hoc bill outside of the annual cycle. This is the only alternative method of payment available to such contributors.

  1. Those not liable to pay Class 2 NICs because although they are self-employed earners, they do not have relevant profits chargeable to income tax under Chapter 2 of Part 2 of the Income Tax (Trading and Other Income) Act 2005 (ITTOIA) and are also not therefore required to pay Class 4 NICs under section 15 of the Social Security Contributions and Benefits Act 1992 (i.e. those running a business that is not a trade, profession or vocation)

Such individuals will be outside of the Self Assessment system and will be entitled to pay voluntary Class 2 NICs via an annual payment or by direct debit.

  1. Those who satisfy certain conditions that allow them to pay voluntary Class 2 NICs for periods while self-employed abroad (see NIM71050)

Self-employed workers who are not gainfully employed as a self-employed earner in the UK do not have profits that are chargeable to income tax and Chapter 2 of Part 2 of ITTOIA 2005, and are not required to make Self Assessment tax returns (see NIM71050). Where such contributors remain subject to UK NICs legislation as a result of EC Regulations or a Reciprocal Agreement, they will be entitled to pay voluntary Class 2 NICs if their total foreign profits are below the SPT, but only by the annual lump sum method of payment.

Note: this does not apply to voluntary payers abroad who fall under regulation 147 of the Social Security (Contributions) Regulations 2001 (see NIM71150).