Class 3 vs 2 contributions

1socrates1

I was previously self employed, am currently not employed. For the last year or so I have been paying Class 3 NI contribution to maintain my NI contributions. I am wondering if there was a way of reinstating my self employed status to pay Class 2 instead of 3, or is this not legitimately possible?

Darksparkle

You won't pay Class 2 NIC unless you have a self employed business making a profit over £5965

1socrates1

Thanks for your quick response.

Castle

Even if your profit is less than £5,965 you can opt to pay class 2 voluntarily:-
https://www.gov.uk/voluntary-national-insurance-contributions/who-can-pay-voluntary-contributions

booksurr

Castle wrote: »

Even if your profit is less than £5,965 you can opt to pay class 2 voluntarily:-
https://www.gov.uk/voluntary-national-insurance-contributions/who-can-pay-voluntary-contributions

indeed, but the joke of that is class 2 is considerably cheaper than class 3 yet class 2 fives you more benefits entitlements than does class 3.

molerat

Not for much longer though (and quite rightly so).

1socrates1

molerat wrote: »

Not for much longer though (and quite rightly so).

Would you please provide a link as to what is going to happen?

leveller2911

booksurr wrote: »

indeed, but the joke of that is class 2 is considerably cheaper than class 3 yet class 2 fives you more benefits entitlements than does class 3.

But the Self employed also pay Class 4 NI which is 9% of the profits above £8k so what benefit do they receive for paying this?.

molerat

1socrates1 wrote: »

Would you please provide a link as to what is going to happen?

http://www.ukbudget.com/2016-measures/abolition-of-class-2-national-insurance-contributions.aspx
http://www.moneywise.co.uk/news/2016-03-16/budget-2016-class-2-national-insurance-contributions-to-be-scrapped-self-employed-wo

leveller2911

molerat wrote: »

http://www.ukbudget.com/2016-measures/abolition-of-class-2-national-insurance-contributions.aspx
http://www.moneywise.co.uk/news/2016-03-16/budget-2016-class-2-national-insurance-contributions-to-be-scrapped-self-employed-wo

Its all a bit misleading really. They are going to scrap class 2 in 2018 which will save the self employed £145 a year but class 2 rates were slashed years ago when they raised class 4 rates.

I remember paying around £7.25p a week ( £377 a year) for class 2 back in the early 90's.

booksurr

leveller2911 wrote: »

But the Self employed also pay Class 4 NI which is 9% of the profits above £8k so what benefit do they receive for paying this?.

class 4 is simply tax. I am ignoring it because it has no benefits entitlements

I grant you this scenario is somewhat specific but compare:
a) self employed person (on below class 4 profits level if you wish) who gets a state pension full credit for the cost of £2.40 per week
against
b) a non working person (stay home parent?) who can only get state pension credit by paying voluntary class 3 at £14.10 per week