Your Questions Answered: How do I not pay Class 2 NICs if I’m under the threshold?

Class 2 National Insurance is currently £3.05 per week (tax year 2020/21). This soon adds up but if you’re under the threshold, you don’t have to pay it. However, mid-tax return, Melissa is looking for clarity.

I'm doing my tax return and I'm a little stuck on the part where it gets to Class 2 NICs... it's telling me I have to pay more than £100 but I earnt way under the limit for self-employed income, or does it include normal employment too?! Thanks!

We’ve already established in our National Insurance post that if your self-employed income is under the threshold for the tax year (£6,475 for 2020/21 tax year) then you don’t have to pay Class 2 NICs. So why the confusion?

The amount appears in your tax return form (as Melissa is currently experiencing) because, although Melissa hasn’t met the threshold, she has the option to pay it. HMRC will assume that you will want to pay voluntarily and therefore, if you would not like to pay it, then you must opt out. Needless to say, if you are above the threshold then you do not have the option and must pay.

How do you opt out?

At the bottom of the HMRC page there's a selection box so just select 'NO' to “would you like to pay Class 2 NICs voluntarily?” and you’re sorted!

Why would you pay voluntarily?

Well it contributes to your overall National Insurance record, which can give you access to various government benefits like State Pension amd Maternity Allowance.

We’ve added your predicted National Insurance bill alongside your live tax bill information in the SansDrama Web App so you can be one step ahead and know what to expect in advance of filling out your tax return.

SansDrama is here to help YOU and everyone else in our amazing creative community. If you've found the site helpful then you can help us to keep this site free to use forever by using the SD Web App.

Love Jo and James x