As part of a major overhaul of the NI system for the self-employed and its gradual alignment with income tax, the flat rate Class 2 contributions payable by sole traders and business partners was due to be scrapped from 6 April 2018. Last month, HMRC announced that the government is delaying the end of Class 2 until April 2019.
For 2015/16 and later years Class 2 contributions have been payable as part of your self-assessment tax bill. However, if your profits from all businesses declared on your 2016/17 self-assessment return are less than ?5,965 (the small profits threshold (SPT), Class 2 NI isn?t added to your self-assessment bill.
It can be to your advantage to pay Class 2 NI voluntarily where your profits are below the SPT (The 2018/19 figure will be announced soon). Payment of Class 2 NI counts towards your state pension and a few other state benefits. You can opt to pay voluntary Class 2 contributions via your self-assessment tax return.