Class 2 National Insurance
A flat-rate National Insurance contribution historically paid by self-employed people to build entitlement to the State Pension and other contributory benefits. From 6 April 2024, self-employed individuals with profits above the Small Profits Threshold are treated as having paid Class 2 NI without actually making a payment. Those with lower profits can still pay voluntarily to protect their State Pension record.
Related Terms
National Insurance
A system of compulsory contributions paid by employees, employers, and the self-employed that funds state benefits including the State Pension, Statutory Sick Pay, and Maternity Pay.
Class 1 National Insurance
National Insurance contributions paid by employees and employers on earnings above the Primary Threshold.
Class 4 National Insurance
National Insurance paid by self-employed individuals on their taxable profits, calculated as part of their Self Assessment tax return.
Self Assessment
The system by which individuals report their own income, gains, and reliefs to HMRC each year through an online or paper tax return, rather than having tax collected automatically under PAYE.
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