National Insurance Recap

 

London Landscape

National Insurance Class 2 will be abolished from April 2019. So with only a year left and if you have been self employed at any point in the year, now is a good time to make voluntary payments via Class 2 in order to top up any shortfalls, if for example, you do not have your full 35 years of state pension.  This works out to be cheaper than paying the voluntary Class 3 NI.

Here is a recap on all the different National Insurance and what they mean:

Class 1

National Insurance Class 1 is the national insurance due by employed workers as long as certain conditions are met. It is paid by the employer through the payroll. Read about this in more detail in my previous post here:-

National Insurance Class 1

Class 2

Class 2 is the national insurance paid by self employed workers. You do not have to pay Class 2 if you earn less than £6,205. This is however, going to be abolished from April 2019 so you only have a short time to make any voluntary contributions to make up any gaps in your NI history. You can read more about Class 2 below:

The Pain of Class 2 National Insurance

Class 3

Class 3 National Insurance is a voluntary contribution that needs to be paid if you have gaps in your NI history. You need to pay 35 years of national insurance to be entitled to full state pension.

Why Pay Class 3 National Insurance Contribution?

Class 4

Class 4 national insurance is the NI paid by self employed workers when they have profits above £8,424. You can read more about Class 4 NI below:

Class 4 NI and your profits

 

Feel free to get in touch if you have any queries.

Tax-Return-Checklist

As usual, if you would like any further details on this or any other accountancy matters, please follow this link:

And your quarterly tax calendar for 2018 can be downloaded here:

Tax dates

 

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