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News - 20 January 2015

Changes to self-employed NICs

Further details of changes to National Insurance contributions (NICs) for the self-employed have been released by HM Revenue & Customs (HMRC).

The changes, which were announced in the 2014 Budget, will result in self-employed taxpayers paying Class 2 NICs via self-assessment from April 2016. HMRC will also make Budget Payment Plans available to taxpayers who pay NICs by direct debit and are up-to-date with their payments, which will help spread the cost of contributions.

 HMRC has also announced that, from 6th April 2015, Class 2 NICs will only be mandatory if the self-employed taxpayer has profits above the Small Profits Threshold (SPT). The SPT will replace the Small Earnings Exception Limit.

Liz Kennett, Manager of the Accounts Department of ABDS comments:
“The collection of Class 2 NICs will be through Self-Assessment (SA) so that the self-employed can pay their income tax and Class 2 and Class 4 NICs together through one process. This will start from the 2015-16 tax year onwards. The existing six monthly bills and current direct debit payments will both cease during 2015. We will automatically cancel the customer’s DD following their last payment in July. The customer will not need to do anything. “

A Budget Payment Plan (BPP) will be available to all SA customers providing they are up to date with their payments. 

The change to the way Class 2 NICs is collected will mean that the self-employed will no longer have to apply for a Self-employed Exception Certificate (SEE) from 2015-16 onwards. Those with low profits or profits below the SPT, who do not wish to pay Class 2 NICs, will not be liable automatically for Class 2 NICs and therefore will not have to seek exception.

Liz Kennett continues:
“The self-employed who also have Class 1 NICs to consider will no longer have to apply for Deferment of their Class 2 NICs as liability for Class 2 will not be assessed until after the end of the relevant tax year.

If you need any help and advice for your business on Payroll and National Insurance, or in outsourced services, contact Lavinia Newman, Stuart Coleman or Liz Kennett to discuss how ABDS can help


ABDS Chartered Certified Accountants of Southampton.
Tel: 023 8083 6900  E-mail: abds@netaccountants.net

Brilliant with numbers   
Great with people  
Clear and precise with advice
Timely and cost effective 
In touch with issues that face our clients and
mindful of their long term strategic goals

Helping Your Business is Our Business

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