Class 1 and Class 2 National Insurance details need to be entered into the Ftax SA100 in order to correctly calculate your tax liability.
If you are self-employed or a partner and your combined profits exceed £6,475 (for 2020/21) and you have worked the full year, you will likely need to enter £159 (for 2020/21) in one of the Class 2 NI boxes.
Please note that payment of Class 1 and 2 National Insurance is not made via this self-assessment process.
Class 1 National Insurance
Class 1 National Insurance is based on your total earnings from Employment and Ministers of Religion sections, between the Primary Threshold (PT) and the Upper Earnings Limit (UEL). These details can be found on your P60.
The information must be entered into boxes on the Employment (page E1) and Ministers of Religion (page MoR1) sections of the Ftax SA100. Next to the boxes, there is a red question mark which will provide an example of how to find the relevant on your P60.
The Total NICable earnings are shown on page TR8.
Class 2 National Insurance
Class 2 National Insurance contributions are not calculated by the Ftax SA100 – they must be entered into one or more of the Self Employment (pages SES2 and SEF5), Lloyds Underwriters (page LU4) and Partnership (pages SP2 and FP2) sections of the form.
The Total Class 2 NIC are shown on page TR8.
Note 1: If you have completed any of the above sections, and your “Total Profit Less Adjustments Used For Class4 And Class2” is over the “Class 2 NIC Small Profit Threshold” (£6,475 for 2020/21), then you will likely have to pay Class 2 contributions. If you leave all the data entry boxes blank in these circumstances, then you will be warned that you might have made an error when you click Calculate on the front page.
If you do need to enter a zero figure, simply enter 0 (zero) into one of the relevant boxes. Most people over the state pension age should enter a zero figure in one of the boxes.
Note 2: If you do have to make Class 2 contributions, they will likely be £3.05 per week (£159 for a whole year) or £3.70 (£193 for a whole year) for Share fishermen, in 2020/21, but in any case should not exceed £196.10 in total (in 2020/21).
If you have been Self Employed, a Lloyds Underwriter or in a Partnership, for less than the whole year (for example, because you started part way through the year, or have reached state pension age during the year), then you will likely have paid less than a whole year’s contributions. In this case you should enter your reduced figure into the relevant box(es).
Note 3: If you have made voluntary Class 2 contributions, there is a tick box next to the Class 2 NI box which you should tick (in addition to entering the amount).
New Class 2 NIC rule
The rules for Class 2 NIC have changed for the 2023/23 tax year onwards.
Prior to the 2022/23 tax year you needed to pay Class 2 NIC if your profits were above the Small Profits Threshold, which was £6,515 in the 2021/22 tax year.
For 2022/23 onwards, you pay Class 2 NIC if your profits are above the Lower Profits Limit,(which is £11,908 in 2022/23). If your profits are below the Small Profits Threshold (£6,725 in 2022/23) then you can choose to pay voluntary Class 2 NIC. If your profits from self-employment are between the Small Profits Threshold and the Lower Profits Limit then there is no Class 2 NIC to pay – instead you will be treated as making Class 2 NIC. This will mean you will be able to access entitlement to contributory benefits in the same way as if you had paid Class 2 NIC.
For 2023/24 onwards, the Lower Profits Limit will be the same amount as the personal allowance for income tax.
You can find bookmarks to all the relevant National Insurance pages of the Ftax SA100 in the left hand bookmarks area.