Changes to the way Class 2 National Insurance Contributions are collected
If you are self-employed as a sole trader or in a partnership, the chances are you are liable to pay Class 2 National Insurance. Many years ago this used to be called “the stamp” – because you literally bought a stamp at the post office and stuck it on a card! Since those times, Class 2 NI has been collected by monthly direct debit or by a six-monthly bill from HMRC (it used to be a quarterly bill).
Currently Class 2 NI is £ 2.75 per week and counts towards some State Benefits, notable the State Pension, this rises to £ 2.80 per week from 6 April 2015.
From April 2015, Class 2 NI will no longer be collected by direct debit or six-monthly bills from HMRC, but will be calculated as part of your self-assessment tax return – in addition to the existing tax and Class 4 NI.
This means that the amount due to be paid to HMRC on 31 January 2017 will be increased by the Class 2 NI.
If you regularly “save” your tax into a separate bank account, you may want to increase the amount you save to set aside the additional £150 (ish) over the year, but this is only making up for the fact that HMRC won’t be collecting this via direct debit.
You will receive a letter in the next few days from HMRC setting all this out.
I would suggest that you monitor your bank account to ensure that HMRC doesn’t collect any further NI after 10 July 2015 – it is collected in arrears. You might want to cancel the direct debit mandate from mid-July just to make sure.