The following Owner-Managed Businesses guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
Class 2 and Class 4 NIC are payable by self-employed earners and partners in a partnership. This guidance note considers Class 2 contributions. For Class 4 contributions, see the Class 4 national insurance contributions guidance note.
Class 2 NIC arise where a self-employed individual has income chargeable to tax as trading income, although there are certain exemptions which are considered below. Class 2 NIC are flat rate contributions which is a fixed weekly amount, payable at £3.05 for 2020/21. For the weekly rates prior to that tax year, see the GOV.UK website.
Class 2 NIC give effective entry to the contributory benefits system, including the state retirement pension.
Class 2 contributions are payable by individuals aged between 16 and the state pension age. The age at which individuals are entitled to a state pension is gradually increasing.
For men born before 6 December 1953, the pensionable age is 65 years. For those born after this date, the pensionable age increases in tranches, reaching 68 years for those born after 6 April 1978.
For women born after 6 April 1950, the pensionable age increases gradually from 60 years until it reaches 65 years for those born between 6 November 1953 and 5 December 1953. From then on, the pensionable age for a woman is aligned to that of a man and so will eventually reach 68 years for those born after 6 April 1978.
There is a state pension age calculator on the GOV.UK website.
There is now a statutory requirement for the state pension age to be reviewed at least every six years. The first such review was published in March 2017. In the July 2017 response to this review, the Government proposed that the state pension age of 68 will be brought forward such that those born between 6 April 1970 and 5 April 1978 will be affected, with the state pension increasing gradually from 67 to 68 depending on the date of birth. There are no current
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