Why consider paying voluntary Class 2 NI via tax returns?

Self-assessment collects tax and NI from self-employed individuals, including Class 2 NI. HMRC’s latest Agent Update provided a useful reminder of the rates and thresholds for 2022/23 following the aligning of the payment thresholds with the income tax personal allowance, but it overlooked a key point that you should consider when filing your tax return for 2021/22 ahead of next week's deadline.

The small profits threshold for 2021/22 was £6,515. With many businesses still in recovery from the pandemic, you may find that your profits don’t exceed this, meaning you don’t need to pay the £3.05 per week fixed amount. This seems like good news. However, unless you are also paying Class 1 NI, e.g. because you are employed as well, Class 2 NI is the only way of securing a qualifying year toward your state retirement pension. Low profits mean you can miss out on accruing further entitlement. Fortunately, there is a solution. You can choose to pay Class 2 NI voluntarily where your profits are below the payment threshold. If you submit your own return, you will be asked if you wish to do this as part of the self-employment section. If you use an accountant, let them know if you wish to do this. If you have already submitted your return, and want to use the solution, you can amend it to include the modest (approximately £159) amount, but you must do this by 31 January 2023 and pay the amount by that date too. HMRC will not accept an amendment for voluntary Class 2 NI after that date.