Class 2 NIC for the self-employed
November 28, 2017
For historical reasons, if you are self-employed, you have to pay two types of National Insurance Contributions (NIC) on your profits: Class 2 and Class 4. Class 2 is currently charged at £148 per year. The Class 4 liability is calculated as 9% of your profits over a lower limit up to £45,000, plus 2% of profits above that level. At present, Class 2 provides you with entitlement to the State Pension and certain other State benefits, but Class 4 provides no such entitlements.
The Government had planned to implement reforms to the NIC system from 6 April 2018, with Class 2 NIC to be abolished from that date. However, the Government has now decided to postpone these changes by a year until 6 April 2019. As a result, if you are self-employed and liable to NIC, you will carry on paying both Class 2 and Class 4 NIC for the 2018/19 tax year.