Home > Agents, Working with HMRC > FAB #2: Class 2 National Insurance

FAB #2: Class 2 National Insurance

Joined-up thinking was never the Inland Revenue’s forte, and continues not to be with HMRC. Although improvements have been made in many areas over the last few years, the National Insurance Contributions Office (or NICO to its friends) at Newcastle can still amaze with its ability for each of its hands to not know what any of the others are doing.

NICO, amongst many other things, deals with agent authorisation, the setting up of new self-assessment records for the newly self-employed and, as its name suggests, all aspects of our National Insurance records.

To be fair, when registering as self-employed you should usually get told to complete a tax return, and also be issued with invoices for Class 2 NICs (or start paying for them via Direct Debit). The problem this post addresses is at the other end, on the cessation of self-employment, often on incorporation. In a perfect world the cessation of your self-employment shown on your tax return should be passed on to NICO, but this is often overlooked.

I have seen on repeated occasions owner-directors still paying Class 2 NICs, often by Direct Debit (monthly payments of £9.60 or £12.00), often through their director’s loan account. Fortunately, as contributions are currently only £2.40 per week, the sums involved are not life-changing, but can build to hundreds of pounds if the oversight continues for several years.

If you are still paying Class 2 NICs and you’re no longer self-employed, you should immediately call NICO to expain the situation. They will either advise you to send in a form CA8480 to claim a refund, or will write to you. If you’re paying by Direct Debit they can arrange for this to be stopped immediately to stop the overpayment increasing. If they write they will only write to you, not your agent if you have one, so you should be alert for the letter arriving. Refunds are limited to six years, so if you think you’ve overpaid, get claiming those refunds!

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