NIM72050 - Class 2 National Insurance contributions: payments: voluntary contributions – annual lump sum
Regulation 89 of the Social Security (Contributions) Regulations (SSCR) 2001 (SI 2001 No 1004)
From 6 April 2015, self-employed earners who are not required to pay Class 2 National Insurance contributions (NICs) under the Self Assessment (SA) system can, in certain circumstances, be entitled to pay voluntary Class 2 NICs.
Regulation 89 enables such contributors to make payment of voluntary Class 2 NICs by an annual lump sum payment.
HMRC will issue a payment request following the end of the tax year, and before 31 October.
Payment of the voluntary Class 2 NICs should be made by the following 31 January. There will be no penalty charge for late payment, although the higher rate provisions could become a factor (see NIM72150). Failure to make payment by 31 January could have a detrimental impact on entitlement to some contributory benefits.
Contributors entitled to pay voluntary Class 2 NICs via an annual lump sum are:
- Those not liable to pay Class 2 NICs because their relevant profits are below the small profits threshold (SPT) – see NIM70300
Such self-employed earners will able to pay voluntary Class 2 NICs at the time they submit their SA return. However, should the self-employed earner decide not to pay voluntarily at the time the SA tax return is filed, they could contact HMRC at a later date and opt to pay via a payment request. This would be an ad hoc bill outside of the annual cycle. This is the only alternative method of payment available to such contributors.
- Those not liable to pay Class 2 NICs because although they are self-employed earners, they do not have relevant profits chargeable to income tax under Chapter 2 of Part 2 of the Income Tax (Trading and Other Income) Act 2005 (ITTOIA) and are also not therefore required to pay Class 4 NICs under section 15 of the Social Security Contributions and Benefits Act 1992 (i.e. those running a business that is not a trade, profession or vocation)
Such individuals will be outside of the SA system and will be entitled to pay voluntary Class 2 NICs via an annual payment or by direct debit.
- Those who satisfy certain conditions that allow them to pay voluntary Class 2 NICs for periods while self-employed abroad (see NIM71050)
Self-employed workers who are not gainfully employed as a self-employed earner in the UK do not have profits that are chargeable to income tax and Chapter 2 of Part 2 of ITTOIA 2005, and are not required to make SA tax returns (see NIM71050). Where such contributors remain subject to UK NICs legislation as a result of EC Regulations or a Reciprocal Agreement, they will be entitled to pay voluntary Class 2 NICs if their total foreign profits are below the SPT, but only by the annual lump sum method of payment.
Note: this does not apply to voluntary payers abroad who fall under regulation 147 of SSCR 2001 (see NIM71150).