Tax Information and Impact Note published alongside Autumn Statement 2023 NICs rate changes

A Tax Information and Impact Note covering the Class 2 National Insurance contributions (NICs) instrument was published on 23 November 2023, alongside the wider NICs rate changes announced at Autumn Statement 2023¹. The note accompanies the Social Security (Class 2 National Insurance Contributions) (Consequential Amendments and Savings) Regulations 2024, which make consequential provisions and savings following the introduction of treating self-employed earners with profits at or above the small profits threshold as having actually paid Class 2 NICs, and the removal of liability to pay Class 2 NICs¹.

The Regulations state that the note "remains an accurate summary of the impacts that apply to this instrument"¹. Part 2 of the Regulations has effect for the tax year 2022-23 and subsequent tax years, with authority for the retrospective effect given by section 3(2)(b) and 4(4) of the National Insurance Contributions (Increase of Thresholds) Act 2022¹.

Under Part 2, self-employed earners who are treated as having paid Class 2 NICs and who file information on their profits late with HM Revenue and Customs are treated as having paid Class 2 NICs on the date they file, for the purpose of determining entitlement to contributory benefits¹. The residence and presence conditions that needed to be met to be liable to pay Class 2 contributions also need to be met by a self-employed earner to be treated as having paid Class 2 NICs under section 11(5B) of the 1992 Acts¹.

Part 4 saves some provisions of section 11A of the 1992 Acts which were repealed by the National Insurance Contributions (Reduction in Rates) Act 2023, to maintain the requirement for most self-employed earners with profits at or above the small profits threshold to file a Self Assessment Tax Return containing information on their profits¹. A replacement section 11A is inserted into the 1992 Acts¹.

Why it matters for households

The changes affect self-employed earners whose profits are at or above the small profits threshold. For that group, the treatment of Class 2 NICs as actually paid applies from the 2022-23 tax year onwards¹. Where such an earner files profit information late, the contributions are treated as paid on the filing date, which the explanatory note says has the effect of those contributions being treated as paid late for entitlement to contributory benefits¹. The residence and presence conditions that applied to liability to pay Class 2 NICs also apply to being treated as having paid them¹.

Most self-employed earners with profits at or above the small profits threshold remain required to file a Self Assessment Tax Return containing information on their profits, so that HM Revenue and Customs can establish eligibility to be treated as having actually paid Class 2 NICs¹. The Regulations do not set out rates or thresholds themselves; the note published on 23 November 2023 covers the wider NICs rate changes announced at Autumn Statement 2023¹. Further detail on how NICs and Self Assessment interact with other liabilities is set out in the site's tax pages.

What happens next

The Regulations are dated 2024 and their explanatory note records the retrospective effect of Part 2 for the tax year 2022-23 and subsequent tax years¹. No further commencement dates beyond that effect are given in the note¹.