NIM74200 - Class 2 National Insurance contributions: special cases: Ministers of Religion

Regulation 2(1) and 2(2) of, and Schedule 1 to, the Social Security (Categorisation of Earners) Regulations 1978 (SI 1978 No 1689)

Schedule 1 (Column B(5)) to the Social Security (Categorisation of Earners) Regulations 1978 provides that any person in employment as a Minister of Religion other than under a contract of service, whose remuneration in respect of that employment does not consist wholly or mainly of stipend or salary, is to be excepted from being treated as an employed earner for NICs purposes. Catholic priests and Elim Ministers are caught by this provision for the following reasons.

Catholic priests

Catholic priests do not receive any stipend or salary. Their remuneration traditionally arises from the congregation collection. Also, there is no employer/employee relationship with the Catholic Church. They are therefore regarded as self-employed earners for NICs purposes.

Despite their National Insurance treatment, Catholic priests are regarded as office holders for income tax purposes and their remuneration is taxable as general earnings rather than under Chapter 2 of Part 2 of the Income Tax (Trading and Other Income) Act 2005 (ITTOIA). Therefore, no Class 4 NICs arises on their remuneration as section 15 of the Social Security Contributions and Benefits Act 1992 (SSCBA) cannot apply.

Elim Ministers

Elim Ministers do not receive any stipend or salary. Their remuneration traditionally arises from the church funds to which they have the last call after the bills have been paid. They are also regarded as self-employed earners for NICs purposes. Equally, Elim Ministers are also office holders and are treated as employed earners for income tax purposes, with their remuneration being taxable as general earnings rather than under Chapter 2 of Part 2 of ITTOIA 2005. Therefore, no Class 4 NICs arises on their remuneration as section 15 of the SSCBA 1992 cannot apply.

From 6 April 2015, Catholic priests and Elim Ministers are no longer be liable to pay Class 2 NICs, as their remuneration is not taxed as profits from a trade, profession or vocation under Chapter 2 of Part 2 of ITTOIA 2005. As they will continue to be gainfully employed as self-employed earners, they are however entitled to pay Class 2 NICs on a voluntary basis.

All Ministers of Religion who are not either employed earners, or treated as employed earners, but are nonetheless gainfully employed, will be entitled to pay Class 2 NICs on a voluntary basis under section 11(6) of the Social Security Contributions and Benefits Act 1992.

Voluntary Class 2 NICs can be paid either by an annual lump sum (NIM72050) or by Direct Debit (NIM72300).