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Can someone please explain to me this issue with my class 2 NI contributions as the man on the phone at self employed helpline just confused me!

(5 Posts)
Thandeka Tue 02-Jun-09 17:04:38

Okay last tax year - part time employed part time self employed but didn't earn enough to go over the threshold to need to pay class 2 contributions (pay class 1 via PAYE).

This Tax year- will definitely earn over the threshold but until 1st Sept still employed and paying class 1 NI.

What is unclear to me is whether I start paying my class 2 NI now for this tax year (alongside my class 1's) or wait until Sept or wait until I have earned over the threshold (maybe Oct).

It seems like I will be doubling up on NI contributions if I pay both but I guess it must be somehow proportional to total income so I won't be paying more?

MrVibrating Wed 03-Jun-09 03:19:01

Quote from this HMRC form:
"You have to pay Class 2 contributions if you are self-employed in your spare time. This applies even if you are also paying Class 1 earnings related contributions as an employee, or office holder. But you do not have to pay Class 2 contributions if you apply for and are granted a Certificate of Small Earnings Exception."

Use that form to apply for the Certificate. You will also have to write to HMRC to backdate that application for last year - it sounds like you have not told them you were self employed, otherwise they would have asked you for Class 2 contributions.

Once you have stopped work you could call the Self Employment Hotline 0845 915 4655 to let them know about your changed circumstances.

Thandeka Wed 03-Jun-09 09:31:18

I have been registered self employed since oct last year but last tax year held the exemption certificate so I didn't have to pay Class 2 contributions. Not sure if the certificate continues this tax year- will phone up and find out- basically this tax year I will earn over the threshold but not until end of oct at earliest as currently employed til sept and won't be earning any "self employed" money til then.

So basically I am trying to work out if i need to start paying my class 2's now or in late oct when I have earnt over the threshold. Self Employment hotline couldn't answer this one for me!

MrVibrating Wed 03-Jun-09 14:18:47

I don't have a certificate in front of me, but I think they are issued with an expiry date which could be up to three years.

Unfortunately this whole thing is badly implemented so I am not surprised the hotline won't tell you what to do. The exemption is related to annual earnings, but Class 2 NIs are a weekly tax so basically it just doesn't work. Because Class 2 NIs are only £2.40 a week, nobody can be bothered to sort out the mess and so I don't know anywhere I can point you to to provide a definitive answer on this.

Thandeka Wed 03-Jun-09 15:42:36

Wow you actually got a certificate!? I just had to send my form off (three times as they kept losing it!) and they have not sent me anything on it (perhaps had better chase that up too!)

Hmmmmm at only £2.40 a week then I guess it doesn't matter massively when I start paying- just need to make sure I have enough weeks of paying it to qualify for MA which I won't need until Feb (if i get that far).

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