The change simplifies the process of paying Class 2 NICs by enabling self-employed and small businesses to pay via their self-assessment (SA), which will reduce the admin of two separate collections.
When does the change come into effect?
- April 2016 for the tax year 2015/16 onwards
What will happen in the interim?
- The current six monthly direct debit billing system will continue until April 2015.
- After April 2015 liability to pay Class 2 NICs will be at the end of each year and legislation will be introduced in the NICs Bill 2014 to reflect this.
What if I have no profits chargeable to tax or my profits are below the profits threshold?
- You will no longer be required to apply in advance for an exception from paying Class 2 NICs. Instead you have the option to pay Class 2 NICs voluntary at the end of the year as liability will not automatically occur.
How have they calculated the amount due?
- They will calculate based on the number of weeks you have been self-employed in the year, this will then be determined when you complete your SA return, and will be paid together with your Income Tax and Class 4 NICs.
If you would like to know more about how this change may affect you email info@jackross.co.uk or call 0161 832 4451.