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keep your Class 2 NIC record up to date if you have low or no profits

Thursday July 2017

Until 5 April 2015, every ‘self-employed earner’ was, if he was over the age of 16 and under pensionable age, liable to pay Class 2 contributions at a prescribed weekly rate.

From 6 April 2015, this liability has applied only to earners with relevant profits from a trade.

Before 6 April 2015, this was enough to create a Class 2 liability in respect of any unincorporated business but from that date liability is limited to cases where there is income at least equal to the new small profits threshold.

Those classed as self-employed earners who do not have trading profits now have no liability to pay Class 2 contributions.  They do, however, have the right to do so in order to protect their benefit entitlements.  The earner may pay the same level of Class 2 contribution as a trader in respect of any week in the relevant tax year in which the earner is in the ’employment’. This enables both traders with low profits or losses and non-traders with business income to maintain their entitlement to the state pension and contributory short-term employment and support allowance.

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