Treasury makes consequential Class 2 NICs regulations

The Treasury made the Social Security (Class 2 National Insurance Contributions) (Consequential Amendments and Savings) Regulations 2024 on 14 March 2024¹. It makes 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 National Insurance contributions, and the removal of liability to pay Class 2 NICs¹.

The regulations are made under powers in the National Insurance Contributions (Increase of Thresholds) Act 2022, the National Insurance Contributions (Reduction in Rates) Act 2023 and the Social Security Contributions and Benefits Act 1992¹. Part 2 has effect for the tax year 2022-23 and subsequent tax years, while Parts 3 and 4 have effect for 2024-25 and subsequent tax years¹. Regulations 9 and 10 come into force immediately after the coming into force of paragraph 4(1) and (2) of the Schedule to the National Insurance Contributions (Reduction in Rates) Act 2023¹.

The instrument addresses how Class 2 contributions are treated for contributory benefit entitlement where profits are reported late. Where self-employed earners treated as having paid Class 2 NICs are late filing information on their profits with HMRC, they are treated as having paid Class 2 NICs on the date they file, for the purpose of determining entitlement to contributory benefits¹. Part 2 also amends the Social Security (Contributions) Regulations 2001 so that the residence and presence conditions needed 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 NICs¹.

Part 4 saves some provisions of section 11A of the 1992 Acts, repealed by the National Insurance Contributions (Reduction in Rates) Act 2023, to maintain the requirement for most self-employed earners with profits at or above the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 profits, so that HMRC can establish eligibility to be treated as having actually paid Class 2 NICs¹.

Why it matters for households

Self-employed people with profits at or above the small profits threshold are treated as having paid Class 2 NICs, which counts towards contributory benefits including the State Pension and maternity allowance¹. The regulations confirm that where a self-employed earner files their profits information late, the Class 2 contributions are treated as paid on the date the return is made, rather than the date they would otherwise have been due¹. This affects the point at which entitlement to contributory benefits is established for that tax year.

The residence and presence conditions that previously applied to liability to pay Class 2 contributions now also apply to being treated as having paid them¹. Parts 3 and 4 take effect from the 2024-25 tax year, while Part 2 applies from 2022-23¹. The requirement for most self-employed earners with profits at or above the small profits threshold to file a Self Assessment Tax Return containing profits information is maintained so that HMRC can establish eligibility¹.

What happens next

The regulations come into force on 6 April 2024, subject to regulations 9 and 10, which come into force immediately after the coming into force of paragraph 4(1) and (2) of the Schedule to the National Insurance Contributions (Reduction in Rates) Act 2023¹. Parts 3 and 4 have effect for the tax year 2024-25 and subsequent tax years¹.