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It’s always NICe to know…?

6th Mar 2015
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Here’s another little reminder of a change starting from April 2015 for those of you who don’t subscribe to Agent Updates or who don’t read it!

Class 2 National Insurance contributions (NICs) are becoming an annual charge for the majority of those who are self-employed for the 2015-16 tax year onwards.  As a result Class 2 liability will not be determined until the Self-Assessment return is filed.

Small Earnings Exception (SEE) Certificates - renewals and applications

The current SEE arrangements will no longer apply from 12 April 2015. In February 2015 HMRC wrote to all those who currently hold a SEE certificate to advise them of these changes.

As a result there is now no need to renew or apply for a SEE. All existing SEE certificates will cease to be valid from 11 April 2015.

Liability for Class 2 NICs will now be determined by the level of profits declared when a person files their Self-Assessment return.  If the level of profits doesn’t reach a Small Profits Threshold no Class 2 NICs will be due.

However, those below the threshold may pay Class 2 NICs voluntarily to protect their entitlement to certain benefits and State Pension as is the case now.

Class 2 NICs payments for 2014-15 tax year

Class 2 payment requests will be issued as normal in April 2015 to collect all Class 2 NICs to the end of the 2014-15 tax year.

Class 2 payments by Direct Debit

Direct Debits for the majority of self-employed persons will stop after collections have been made for the 2014-15 tax year. The last collection for the 2014-15 tax year will be made on 10 July 2015 since Direct Debits for Class 2 NICs are collected 4 months in arrears.

CWF1 Self-Assessment and Class 2 National Insurance contributions

Due to the changes to the collection method of Class 2 National Insurance and the process to determine liability, additional boxes will be needed on the registration forms.

In the past HMRC have accepted out of date versions of paper registration forms.  However, from April 2015 they will no longer accept them as they will not include all the information that is required and any old versions of the form will apparently be returned un-actioned.

(A current check of the website gives no indication that the form has been updated at this point in time…)

Click here to download a PDF of this tax tip

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Replies (2)

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By lme
16th Mar 2015 20:51

Really helpful thank you

The content AND the pointer for people who hadn't managed to read the agent update recently!

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By Younis
13th Apr 2015 12:33

I quote from the OP " Class 2

I quote from the OP " Class 2 National Insurance contributions (NICs) are becoming an annual charge for the majority of those who are self-employed for the 2015-16 tax year onwards" . 

For the majority !!! so, who ares the minority that are exempted from this change??

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