NIM70600 - Class 2 National Insurance contributions: general information: small earnings from subsidiary self-employment: administrative concession

A person who was in concurrent Class 1 and Class 2 employment previously did not need to pay Class 2 NICs or apply for SEE (NIM21000) if:

• the earnings from Class 1 employment were at or above the Lower Earnings Limit (see NIM01005); and
• the net earnings from self-employment were expected to be £1,300 or less in the tax year

This was a concession and was not written into legislation. Following the House of Lord’s decision in R v IRC, ex parte Wilkinson [2005] UKHL 30, HMRC reviewed administrative concessions and this one was removed. Any person who is self-employed must register as such, and if their relevant profits are below the Small Profits Threshold (SPT) they will not be liable for Class 2 NICs, but can pay voluntarily if they wish to do so.

Autumn Statement 2023

From 6 April 2024 the Class 2 Lower Profits Threshold was removed which means that liability to pay Class 2 NICs no longer exists from tax year 2024 to 2025 onwards. A self-employed earner with profits equal to or above the SPT is treated as having actually paid Class 2 NICs. A self-employed earner with profits below the SPT can still choose to pay Class 2 voluntarily.