Most individuals who are self-employed are required to pay Class 2 NIC – a contributory benefit which protects their entitlement to the State Pension. Those who are not liable can pay voluntarily to protect their benefit entitlement.
Changes have been made for the 2015/16 tax year. The amount of the liability will be determined when a person completes their self assessment return. This means that Class 2 NIC will be paid alongside income tax and Class 4 NIC.
Existing direct debit arrangements ceased in July 2015. For those who still wish to spread the cost, it will be possible to make regular payments to HMRC throughout the year. For those who do not use this facility, the payment date for the 2015/16 liability will be due on 31 January 2017.
Those with small profits will no longer have to apply in advance for an exception certificate. Voluntary payments will continue to be allowed.
However, these changes could all be short-lived. In Budget 2015, the Coalition government proposed the abolition of Class 2 NIC and reforms to Class 4 NIC to include a contributory benefit test.