Why pay Class 2 and Class 3 NIC?

cjc8

My husband has just gone Self Employed (DEC'11) and registered online with the HMRC. We elected to pay class 2 NIC via direct debit and now received a letter from HMRC saying that they are also going to collect class 3!
Any ideas why they are doing this? Information on their website about class 3 doesnt help - Thanks in advance

leveller2911

Its usual for the self employed to pay Class 2 and class 4 NI. Class 2 is supposedly to go towards a pension and class 4 which is about 7% of your husbands profit for the year goes towards Government coffers. He will get nothing in return for paying Class4 NI..........Can't comment on Class 3 as Ive never paid class3......

CIS

We elected to pay class 2 NIC via direct debit and now received a letter from HMRC saying that they are also going to collect class 3!

Class 3 NI is voluntary - it counts for benefit purposes in cases where Class 2 NI doesn't. They send out letters on a reasonably regular basis to various groups of people inviting then to Class 3 if they wish to.
http://www.hmrc.gov.uk/students/wf27_3.htm

InsertWittyName

cjc8 wrote: »

My husband has just gone Self Employed (DEC'11) and registered online with the HMRC. We elected to pay class 2 NIC via direct debit and now received a letter from HMRC saying that they are also going to collect class 3!
Any ideas why they are doing this? Information on their website about class 3 doesnt help - Thanks in advance

Read the letter again, carefully.

I got the same letter myself recently.

The table it shows lists both Class 2 and Class 3 contributions, but that is just for illustration.

I had to read the letter two or three times myself before I realised that it was basically a generic letter and the Class 3 didn't apply to me.