Background
Class 2 national insurance contributions (NIC) are payable by sole traders and partners in a partnership as part of their self-assessment tax return submission and help build entitlement to certain benefits and the state pension. For the 2024/25 tax year class 2 NICs are not required for those sole traders or partners in a partnership with profits in excess of £6,725.
However, it has recently been reported that HM Revenue & Customs (HMRC) have been issuing self-assessment calculations for the 2024/25 tax year which include class 2 NIC in error.
Detail
Significant changes were introduced with effect from 6 April 2024 regarding class 2 NIC. For the 2024/25 tax year onwards, class 2 NIC does not need to be paid by sole traders and self-employed partners if their profits for the tax year are equal to or more than the small profits threshold (SPT). Instead, class 2 NIC is treated as already having been paid by the individual. The SPT is £6,725 for 2024/25 and increases to £6,845 for the current 2025/26 tax year.
Individuals with profits below the SPT continue to have the option of paying class 2 NIC on a voluntary basis in order to help maintain their entitlement to state benefits.
The changes to class 2 NIC appear to have given rise to an issue in HMRC’s system for some taxpayers. It has been reported that on submission of a tax return with profits equal to or in excess of £6,725, HMRC has subsequently issued a self-assessment calculation (SA302) with a correction message stating that class 2 NIC is payable.
It is understood that HMRC is currently working on a solution to this issue and expects to have this in place shortly. HMRC have stated that they will publish further information in due course.
Taxpayers are encouraged to view their NIC record and check their entitlement to the state pension using HMRC’s app.
If you have received an amended tax calculation from HMRC including class 2 NIC and are concerned that it may be incorrect, or if you would like more information on any points raised above, please speak to our Tax Director, Jenny Marks.
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