Class 2 NIC exception (low earnings)

Class 2 NIC exception (low earnings)

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I have a query on the interpretation or application of SI2001/1004 Social Security (Contributions) Regulations 2001, Regulation 44(5)(a), to be found at
http://www.opsi.gov.uk/si/si2001/20011004.htm#44

Does an increase in profitability within the period covered by the certificate, so as to exceed (pro rata) the annual de minimis limit, constitute one of the "conditions" referred to in this regulation such as to invalidate the exception?

If it does, how do you determine the point at which requirement to notify becomes "immediate"? Normally you have 3 calendar months to notify chargeability. Is the time limit in these circumstances tighter?

Thanks in advance.
Clint Westwood

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By AnonymousUser
24th May 2006 16:52

Thanks Mark
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By markfaherty
24th May 2006 14:54

No limit
The exception is on an annual basis i.e. the certificate applies for a whole tax year. There is therefore no requirement to regularly check profitability to see if it has exceeded the limit, pro-rata or otherwise, and there is no specified time limit for notifiying HMRC that the earnings limit for the exception has been exceeded. For some borderline cases this may not be until after the end of the tax year. Accordingly there is no penalty for late notification. It is, of course, an advantage to notify sooner rather than later to avoid the accumulation of arrears.

Once HMRC have been made aware of this they will of course reinstate Class 2 contributions from the start of the tax year concerned and issue a demand for the arrears that have accumulated. You can always check with the self-employed helpline on 0845 915 7141.

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