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HMRC internal manual

Tax Credits Manual

From
HM Revenue & Customs
Updated
, see all updates

How to check the bill status on NPS for a customer who is trading as self-employed

Step 1

A self-employed earner who

* has reached age 16 and
* has not reached state pension age and
* satisfies the prescribed conditions of residence or presence in the United Kingdom

is required to pay Class 2 National Insurance contributions unless they are exempt. Class 2 NICs are fixed weekly amounts paid by the self employed. They are due regardless of trading profits or losses, but those with low earnings can apply for exemption for paying. While the amount is calculated to a weekly figure they are typically paid monthly or six monthly arrears.

To establish if a customer has paid their Class 2 NI contributions we use NPS. Within the NPS Bills screen, you will see the following information.

* The latest date of issue
* Type
* Status
* Amount

Latest Date of Issue

This is the date the bill was issued.

Type

This is the method and frequency the customer has to pay their bill. Payments can be made by internet, telephone banking, CHAPS, Bank Giro, Post Office, or by post. Bills are issued twice a year in October and April showing payments due by 31 January and 31 July. A customer opting for this frequency of payment does not need to wait until due date to make payment.

Where a customer opts to pay their Class 2 NICs by direct debit, payments can be collected monthly or six monthly.

Status

This is the status of the customers account. It will show one of the following: Paid, Part Paid, Unpaid or Not Applicable.

Where the customers bill status is shown as PAID. The customer has received a bill and paid that bill within the period in which they have to pay.

Where the customers bill status shows as PART PAID. The customer has received a bill and paid part of their bill within the period in which they have to pay their bill.

Where the customers bill status shows UNPAID. The customer has received a bill but have failed to pay their bill within the period that they have to pay their bill.

If the customers status shows as NOT APPLICABLE. This is an indication that the conditions of the period of the Class 2 NICs calculated that is due using the applicable Class 2 rates may have changed. This known as the ‘receivable.’ There are a number of reasons why the rates may have changed. For the example the customer

* may no longer be self-employed
* may be exempt due to being in receipt of a benefit
* may hold a Small Earnings Exception certificate

Or

* may be earning less therefore is no required to pay Class 2 NICs
* monthly of six monthly by direct debit, or
* in response to payments HMRC issue in October and April.

Note: Where ‘Not Applicable’ is shown and further bills are issued any outstanding Class 2 NICs which remain unpaid will be added to the next bill issued. So when you see entries where bills have been issued and the status shows ‘Not Applicable’ for those periods but later bills have been issued and paid, the customer has paid all Class 2 NICs that are due to be paid by them. (They have simply recalculated and paid at a later date.)

Amount

This is the total amount of Class 2 NICs due to be paid by the customer. From April 2011 a self-employed person can pay their Class 2 NICs either

* A customer can also make one-off payments for any other arrears they may owe
* A self-employed customer period of payments is usually 26 weeks. Where a customer misses a payment and a subsequent payment is requested the number of contribution weeks will be reviewed and the amount requested may be due at the higher rate.