Class 2 National Insurance contributions Frequently Asked Questions

Can I cancel my Small Earnings Exception Certificate and start paying Class 2 National Insurance contributions?

Yes. Simply complete the reverse of the Certificate and return it to:

HM Revenue & Customs
National Insurance Contributions Office
Self Employment Services
Longbenton
Newcastle upon Tyne
NE98 1ZZ

You can also pay Class 2 National Insurance contributions on a voluntary basis without cancelling your certificate. Call the Self-Employment Services (SES) Call Centre on 08459 154655.

Do I stop paying if I don't make a profit, go sick or go on holiday?

If you are not making a profit you must continue to pay Class 2 National Insurance contributions until the end of the contribution year and then apply for a refund of those National Insurance contributions. A refund could result in a non-qualifying year for benefit. What is a qualifying year? The amount of basic State Pension you will receive when you reach State Pension age depends on the number of years you have paid, or been treated as paying, National Insurance contributions. These are called 'qualifying years'. Sometimes you can be credited with National Insurance contributions when you are unable to do paid work.

If you believe that your profits for the following year will be low or NIL, you can apply for Small Earnings Exception (SEE) by using the attached form CF10 (PDF 952K).

You do not have to pay Class 2 National Insurance contributions for any complete week of illness (Sunday to Saturday) But you can apply for Incapacity Credits.

You are still liable to pay Class 2 National Insurance contributions when you are on holiday.

I am self-employed. What National Insurance contributions do I pay?

You must pay Class 2 National Insurance contributions current rates unless

  • you are over Retirement Age (60 for women, 65 for men)
  • you are a married woman or widow who holds a valid Married Women's Reduced Rate Election certificate. (Withdrawn in 1977 for new claimants)
  • you have applied for and been given a Certificate of Small Earnings Exception for the period concerned

You can pay your Class 2 contributions by Direct Debit every month

In addition you may be asked to pay Class 4 contributions, if your profits are high enough. This is payable together with tax as part of your annual self assessment.

Contact 0845 915 4655 for further information.

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I am self-employed. How do I pay my NI contributions?

You can pay your Class 2 contributions current rates by

  • Direct Debit every month

In addition you may be asked to pay Class 4 contributions, if your profits are high enough. This is payable together with tax as part of your annual self-assessment.

Contact 0845 915 4655 for further information.

Is there a limit to the amount of Class 2 National Insurance contributions I will pay in one year?

Yes. There is a limit set on all classes of National Insurance contributions for each year. This is the 'Annual Maximum'.

However, as Class 2 National Insurance contributions are paid at a flat rate, if you are only self-employed it is impossible for you to exceed the Class 2 annual maximum.

Is there any scope not to pay?

Subject to certain specific exceptions, you are liable to pay Class 2 National Insurance contributions: it is not optional. If you are liable to pay, failure to do so could result in legal action being taken to recover those unpaid National Insurance contributions.

What help is available if I get confused or can't understand the form?

You can call the Self-Employment Services (SES) Call Centre on 0845 915 4655.

What is the current rate of Class 2 National Insurance contributions?

This link will give you information on the current National Insurance contributions rates.

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When must I start paying National Insurance contributions?

You should notify us of your self-employment and arrange to pay Class 2 National Insurance contributions as soon as you start self-employment.

Failure to do so could mean that you will be liable to a penalty of £100 and will have to pay National Insurance contributions at a higher rate. There is also a possibility you could lose entitlement to some state benefits.

Note: The Contribution week runs from Sunday to Saturday. If you start self-employment on any day of the week apart from a Sunday your liability will commence on the previous Sunday

Example: If you started on Sunday 26/02/06, liability starts from 26/02/06
If you started self-employment on Saturday 04/03/06, liability also starts from 26/02/06.

Why has the rate gone down in recent years?

The rate was reduced so that more self-employed people with low earnings will be able to gain or improve their entitlement to the State Retirement Pension and certain other benefits.

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Will anyone check I've operated the system properly? What if I make a mistake?

Yes. If you under or overpay you will be notified.

The method of notification will depend on how you make your payments.

If you pay by quarterly bill, your next bill will be automatically adjusted.

If you pay by Direct Debit the only time that we are likely to contact you is if the Direct Debit ceases unexpectedly - Self-Employment Services Customer Account Section will contact you.

I am thinking of working for myself, what do I do?

You can call the Self Employed Contact Centre on 08459 154 515 who will give you helpful information, issue you with a starting up in business guide and register your self-employment if you do decide to become self-employed.

Is there a time limit for registering as self-employed?

There is no time limit to register. However, if you do not register within three months from the end of the month in which you first started your business, you will receive a penalty of £100 for late notification.

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I'm self-employed, is there any face to face help available to me?

Yes, you can attend a workshop with our Business Support Team who can help and give you practical advice on record keeping, National Insurance and Self-Assessment.

I am taking on my first employee, what do I do?

You should contact the Employers help line on 0845 714 3143. They will send you an information pack and give you advice on becoming an employer.

I am unsure whether I am employed or self-employed, can you help me?

You can now access the Employment Status Indicator toolkit to help with your status.

I am starting work as a sub-contractor, how do I get a registration card?

You should go in person to any HMRC Enquiry Centre and fill in an application form. You should take two forms of identification, one of, which must show your current address and the other should preferably show your photograph. For example a current driving license, passport, utility bill or a credit card statement dated within the last three months. You must also take a passport size photograph.

How do I register as a contractor & operate Construction Industry Scheme (CIS)?

To register you should contact the New Enterprise Support Initiative (NESI) on 0845 60 70 143. They will notify your tax office and issue you with a new contractor pack, which will include a supply of stationery you will need, as well as some useful guidance.

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How do I pay Class 4 National Insurance contributions?

Class 4 National Insurance contributions are paid through Self-Assessment (SA) with your annual tax bill.

Why do I pay National Insurance contributions?

You are legally bound to pay Class 2 National Insurance contributions if you are
Self-employed, regardless of any benefit you may claim. They help you to qualify for certain benefits including basic state pension, incapacity, bereavement and maternity benefits.

I have completed two Direct Debit mandates. Will two payments be taken from my bank account?

No, we request Direct Debit payments quoting the customer's National Insurance number. This means that only one payment is taken from their account even if two Direct Debit mandates were completed in error.

I currently pay by Quarterly Bill and want to change to Direct Debit, what do I need to do?

You will need to complete a Direct Debit (PDF 218K) mandate. Once we receive the completed mandate we will issue a

  • letter confirming the Direct Debit date
  • bill for any payment due up to the first Direct Debit request.

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Will you tell me when my Direct Debit payments will start?

Yes, once the completed Direct Debit mandate has been received we will issue a letter, at least ten working days before the first Direct Debit payment, confirming the

  • date and amount of the first Direct Debit payment
  • future Direct Debit dates and amounts.

I do not have an account that accepts Direct Debit can I pay from my partner's account?

Yes, as long as the account holder signs the Direct Debit mandate and the bank/building society accepts.

I have changed my bank account do I need to complete more forms?

If your new account has a different sort code, your bank can arrange to transfer your existing Direct Debit to your new account.

Can I pay arrears of National Insurance contributions by Switch or Delta?

Yes, you can pay by Switch or Delta or by using the giro slip at the bottom of your bill.

If I pay my bill at the Post Office who do I make the cheque payable to?

The cheque should be made payable to 'Post Office Ltd'.

My earnings from self-employment are low do I have to pay National Insurance contributions?

If you believe that your profits will be low or NIL, use this link to help with the Class 2 Small Earnings Exception rates, you can apply for Small Earnings Exception (SEE) by using the attached form CF10 (PDF 952K).

I have been on holiday for two weeks; do I still have to pay my National Insurance contributions?

Yes, because you are on a temporary break, you continue to pay your National Insurance contributions as usual.

I have finished being self-employed; do I still need to pay Class 2 National Insurance contributions?

No, you stop paying Class 2 National Insurance contributions from the Saturday following the date you stopped self-employment. Please advise us when you finished being self-employed.

HM Revenue & Customs
National Insurance Contributions Office
Self Employment Services
Longbenton
Newcastle upon Tyne
NE98 1ZZ

Or call the self employed contact centre on 0845 915 4655

I am a Share Fisherman, what rate of National Insurance contributions do I pay?

You pay a higher rate of Class 2 National Insurance contributions to protect your right to receive Job Seekers Allowance because EU Law prevents you from fishing all year round. The current rates are shown here.

What records do I need to keep whilst self-employed?

You must keep records of all business income and expenses by keeping invoices, bank statements and pay-in slips.