If you are self-employed, there will be changes to the National Insurance that you pay from 6 April 2024 onwards.

Currently, the self-employed potentially pay two Classes of National Insurance – Class 2 and Class 4. If your profits are more than £12,570 for 2023/24, you will pay Class 2 contributions of £3.45 a week and also Class 4 contributions on your profits. Class 4 contributions are payable at a rate of 9% on profits between the lower profits limit of £12,570 and the upper profits limit of £50,270 and at the rate of 2% on profits in excess of £50,270.

It is the payment of Class 2 contributions that currently provides the means to build up a qualifying year for state pension purposes. If your profits are below £12,570, you do not pay Class 2 contributions. However, if your profits are between £6,725 and £12,570 you are treated as having paid Class 2 contributions at a zero rate, giving you a qualifying year for free. If your profits are below £6,725, you can opt to pay Class 2 contributions voluntarily. This is a much cheaper option than making Class 3 contributions.

From 6 April 2024, Class 2 contributions are to be abolished and from 2024/25 you will only pay Class 4 contributions if your profits exceed £12,570. The main Class 4 rate is reduced to 8% from the same date.

However, you will benefit from a National Insurance credit if your profits are between £6,725 and £12,570, providing a qualifying year for state pension purposes. If your profits are below £6,725 for 2024/25, you will be able to make voluntary contributions at the rate of £3.45 per week.

These changes will save up to £556.40 in 2024/25.

We can explain what these changes will mean for you and help you decide whether it is worthwhile making voluntary Class 2 contributions. Contact us at enquiries@ardury.co.uk to discuss further.