Class 2 NI - Real Mess Up

LittleJen_2

The mess up is completely my fault. About 5 years ago I started some self employment in my spare time (outside of my full time job as an employee). For the self employment I registered with the IR and paid income tax and got a small earnings exemption certificate. Unfortunetly I thought that the certificate was until you ever go over that limit (which I never have, always small earnings) but I've just realised I should have been renewing it each tax year. They've never sent anything since, no bills or anything, but I've still made a mistake.

What can I expect if I sort this out. Will a begging letter with proof of my earnings over those years without the certificate going to help or am I looking at having to pay Class 2 for those years, interest and fines?

PlutoinCapricorn

Do you mean 'renew' or 'review'? The latter also applies if you want to pay Class 2 voluntarily to secure some benefits.

If you have been reporting your SE earnings, then I am sure that you would get a bill as soon as you earn over the limit. You can always phone and ask about this.

Have you actually been earning over the limit in any year?

LittleJen_2

Well I don't know. I just assumed from what I just read on their site that I need to apply for a new certificate each year.

No, there hasn't been any year where it went over the limit. The profit has gradually risen but it's no where near the limit. I've always done a Self Assessment though.

LittleJen_2

OK, panic over!!!

I just went through my folder looking for the certificate and found another letter from after it saying that I don't have to pay Class 2 from for the period April 2007 to April 2010

How did I miss that!

So I assume that I now need to apply again in time for this April?

Thanks for your help Plutonin

PlutoinCapricorn

I love that 'panic over' feeling! It really is better to be safe than sorry, you were right to check it, and it is good to keep all the paperwork in a safe place for reference if necessary.

The limit for exemption increases from time to time, so you may still be exempt for a while.

Being an employee and topping up the income with a bit of self employment is a good position to be in. If you did stop paying Class 1 under PAYE, you might be better off paying Class 2 anyway, for benefits, JSA, pensions etc.

LittleJen_2

Tell me about it. I thought all my savings would be off into the sunset for a minute. I keep everything, you just never know.

I'll keep that in mind as I am thinking of going back to freelance, but I expect I'll go back to an accountant as well if I do that.

Thanks again, appreciated.

Jen.

PlutoinCapricorn

MSE is a good place to come if you have any more freelance-related (or other) questions.