Should I pay class 2 national insurance this year

rustywallet

Hi, my only earnings in the last tax year were approx. 12000 in employment, and just under £1000 in self employment. 
I have paid my NI contributions all my life, but wondered if I needed to pay class 2 this year as I earned so little? It is an option to not pay this on my tax return. Is it necessary, will it affect my pension if I don't pay? Many thanks.

[Deleted User]

No need to pay - the £12000 on PAYE will fully count towards your state pension. Why are you not using the trading allowance?

https://www.gov.uk/guidance/tax-free-allowances-on-property-and-trading-income

rustywallet

Thanks. I've never heard of the trading income before. I am registered as self employed, so will I still need to do a tax return I think this year 2019/20. 

Dazed_and_C0nfused

rustywallet said:

Thanks. I've never heard of the trading income before. I am registered as self employed, so will I still need to do a tax return I think this year 2019/20. 

If you have been sent a return or notice to file one then yes.

But if your turnover is less than £1,000 then you can use the trading allowance* to reduce your profit for tax purposes down to £0.

*this assumes your self employment isn't connected to your PAYE employment and you haven't deducted any expenses to get to the <£1k figure in the first place.

rustywallet

My SE is not connected to my PAYE. When i file the tax return, will it automatically take into account the trading allowance as i earned under £1000? thanks for your help. 

Dazed_and_C0nfused

No, you will need to set the return up correctly.

May simply be a tick box to say your are self employed but profit is £0 due to trading allowance.

rustywallet

Thanks for your help (both). Really appreciated. 
Right, back to my tax return

Jeremy535897

Dazed_and_C0nfused said:

No, you will need to set the return up correctly.

May simply be a tick box to say your are self employed but profit is £0 due to trading allowance.

Box 10.1 SA103S. It requires an amount, which will be the lower of the turnover plus any other business income, and £1,000. If turnover and any other business income combined exceed £1,000, you may be better claiming the actual expenses, if they also exceed £1,000.