CH 22 - Classes 2 and 4 NI

Question 1

When Class 2 & 4
comences
&
ceasses

Answer 1

Class 2 & 4 commences on 16yo

Class 2 ceases immediatelly on reaching retirement age (66)

Class4 stops from the start of the the tax year after the one in which pensionable age is reached.

Question 2

When Class 3 NI rate is paid?

Answer 2

It is voluntary contribution to Class 3 NI
if either Class 1 & 2 are not paid.

Question 3

When entitlement to the state pension and otehr state benefits is preserved?

Answer 3

When profits are between
small profit treshold and lower profits limit

any entitlements to the state beneift pensions are preserved.

Question 4

When Class 4 is payable?

Answer 4

Class 4 is payable in the same way as income tax under self-assessment

payments on account are due 31.01 & 31.7
balancing payment is due on 31.01 following the end of the tax year

Question 4

When Class 2 is due for payment?

Answer 4

Class2 NI is due for payment as a part of balancing payment payable 31.January

However, not taken into account when calculating payments on account.

Question 5

How the losses are treated for Class 4?

Answer 5

Losses are always carried forward and reduce future profits for NICs purposes, even if they have actually been used against other income for income tax purposes.

Question 6

How Class 3 NI is paid?

Answer 6

Class 3 NICs can be paid voluntarily where a taxpayer pays no Class 1 or Class 2 NICs for a tax year but wishes to preserve their entitlement to benefits such as the state pension.

Question 7

When Deferment of Class 1 NIC is possible?

Answer 7

• where an individual can demonstrate that
  be due a refund of Class 1 NICs

however, Class 1 contributions will still be required to pay at 2% on earnings in excess of primary threshold.