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Class 2 NIC collection issues remain unresolved

HMRC started to collect Class 2 NICs through self-assessment from the 2015/16 tax year. However, implementing this change has been fraught with problems and correcting cases where NICs have not been collected resulting in unnecessary administration and costs for both taxpayers and HMRC

Taxpayers may not become aware of the importance of paying Class 2 NICs until they need to claim state benefits, including the state pension. The problem may not emerge for many years and by then it may be too late to rectify matters

Everyone should monitor their national insurance record through their personal tax account to ensure that their contributions are being accurately recorded by HMRC

Paying Class 2 National Insurance is not only a legal requirement, it also protects a person’s future entitlement to State Pension

HMRC has confirmed that most people are correctly registered for SA and Class 2 NICs and do have their Class 2 NICs included in their SA calculation. Where this does not happen HMRC has found that, in the overwhelming majority of cases, the underlying reason is that the self-employed person has not correctly registered as self-employed. They have registered for SA (on the CESA system) but not registered for Class 2 NICs (on the NPS system). As it is the NPS system that determines the amount of Class 2 NICs due this prevents Class 2 being included in SA calculations

Completing form SA1 only results in registration for Self-Assessment tax and Class 4 NICs whilst completing form CWFI results in registration Self-Assessment tax, Class 4 NICs and Class 2 NICs

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