NIM23650 - Class 2 National Insurance contributions: Entitlement to pay voluntarily: Time limits

Regulation 1(2) and 4 of the Social Security (Crediting and Treatment of Contributions, etc.) Regulations 2001 (SI 2001 No 769)

There are time limits within which voluntary Class 2 National Insurance contributions (NICs) must be paid to count for contributory benefits, see NIM23001.

Although a person did not have to pay Class 2 NICs if they were not liable to do so, if they paid them more than 42 days after the end of the tax year in respect of which they were paid, they were treated for the purposes of entitlement to any contributory benefit as paid on the date payment was made. So, if a persons’ entitlement to a contributory benefit could be enhanced by NICs paid after the 42 days described previously, they would only have enhanced that benefit from the date the NICs were paid. The 42n d day after the end of a tax year is 17 May. A person who paid Class 2 NICs they were entitled, not liable to pay, in response to quarterly bills, payment requests or by DD, may have paid some of the NICs after the 17 May. This potentially could have had an adverse affect on entitlement to contributory benefits. See the example below which illustrates this point.

Example

Mrs Foster had Small Earnings Exception but asked for quarterly bills to be issued so she could consider paying Class 2 NICs voluntarily. She paid the Class 2 NICs due for the first three quarters of the year during tax year 2010 to 2011. HMRC issued the last quarterly bill in April 2011.

Providing Mrs Foster paid the NICs for the last quarter of tax year 2010 to 2011 year no later than 17 May 2011, the NICs were treated as paid by the due date for contributory benefit purposes. If Mrs Foster made a claim to such benefits anytime from 6 April 2011 up to and including the date of payment, if

  • paid no later than 17 May 2011, and
  • the NICs paid for tax year 2010 to 2011 were needed to qualify for benefits or would enhance the amount of the benefit payable,

those NICs counted from the date of the claim if this was earlier than the date of payment.

If, however, she made a claim to such benefits anytime from the 6 April 2011 to the date of payment, if

  • paid after 17 May 2011, and
  • the NICs paid for tax year 2010 to 2011 were needed to qualify for benefits or would enhance the amount of the benefit payable,

those NICs would only count from the date of payment.