A couple of months ago a self-employed client asked me why he was still paying his monthly direct debit to HMRC for Class ” National Insurance.
As a reminder of the changes from 6 April 2015 the main changes are:
- Self-employed people no longer need to apply for an exception from paying class 2 National Insurance due to low self-employed profits or due to the maximum National Insurance being paid through employment. If your profits are below the Small Profit Threshold (£5,965 for 2015-16), you won’t be asked to pay
- Any class 2 National Insurance that is due will be calculated when the tax payer sends in their 2015-16 tax return. It will be added to their self-assessment tax bill
- If the tax payer pays class 2 National Insurance, but they are not in self assessment (e.g they work full-time abroad), HMRC should contact them to make arrangements for continuing to pay class 2
In answer to my self-employed clients’ question about still paying Class 2 National Insurance by direct debit, I pointed out that he is actually paying four months in arrears. This means that his direct debits would continue for four months into the 2015/16 tax year, i.e. until 10 July 2015 – in order to pay the 2014-15 contributions owed.
From August 2015, he will have no automatic deductions made by direct debit. His full year’s contributions will be due for payment by 31 January 2017, along with any income tax and class 4 National Insurance calculated based on his tax return for year-ended 5 April, 2016.