Self Employed – Are you properly registered?

If you are a self-employed individual, either as a sole trader or partner within a partnership, you should be formally registered as self-employed with HM Revenue & Customs. If you are not registered then you may discover that you have not been paying National Insurance contributions (‘NIC’).


The self-employed pay Class 2 NIC at a current rate of £2.85 per week which qualifies you for state benefits, one being the state pension. By paying a full year’s worth of Class 2 NIC you will obtain a full qualifying year for the purposes of your state pension. Under current legislation you require 35 years of qualifying years in order to obtain a full state pension. Class 2 NIC is now collected via the self-assessment tax return, it was previously dealt with as a separate monthly direct payment.


In addition to Class 2 NIC, self-employed individuals pay Class 4 NIC as a percentage of their profits. Class 4 NIC currently awards you no qualifying years towards state benefits. However, from 6 April 2018 Class 2 NIC will be abolished, and qualifying years towards state benefits will be dependent on the level of the individual’s profits which are subject to Class 4 NIC. This system will mirror the current NIC regime for employed individuals who pay Class 1 NIC to obtain qualifying years.


Before these changes are implemented it is strongly recommended that you check that you are indeed registered as self-employed with the NIC Office. If you are not then you will now need to register and carry out a thorough review of your NIC record to consider whether you should make voluntary contributions for earlier years. Before making any voluntary NI contribution it is strongly advised that you seek professional advice for the best course of action.


You can either request an NIC record from the NIC Office or alternatively log into your online personal tax account which will give details of your NIC record. From this record you will be able to review your NIC history and most importantly whether you have qualifying years.


If you would like to discuss self employment in the Healthcare Sector in more detail or you would like to speak with a member of our  team, please contact 0115 972 1050 to be put in contact with a member of our healthcare services team.