Last chance to pay Class 2 NIC
As a self-employed individual, you will be required to pay only one class of National Insurance Contributions (NIC) from 6 April 2019. Good news! But there is a catch.
Currently, if your profits are below the small earnings threshold of £6,205 (for 2018/19), you don’t have to pay any NIC. But you can voluntarily pay Class 2 NIC of £153.40 (for 2018/19) to ensure the year counts towards your state retirement pension and other state benefits. Class 2 NIC is being abolished from 6 April 2019, however.
Paying NIC voluntarily is a good idea if you don’t currently have 35 years of contributions, which are needed to receive the full state pension. You can check how many years you have accumulated by accessing your personal tax account on: www.gov.uk/ personal-tax-account.
You can pay Class 3 NIC voluntarily, but that costs £761.80 for the year. So paying Class 2 NIC rather than Class 3 NIC saves you £608.40 for 2018/19.
Similar savings may be made for up to six earlier tax years, where you have gaps in your contribution record but you did make a small amount of self-employed profits in the year.