The Social Security (Class 2 National Insurance Contributions) (Consequential Amendments and Savings) Regulations 2024

Explanatory Note

(This note is not part of the Regulations)

These Regulations make 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 (NICs) and removal of liability to pay Class 2 NICs.

Regulation 1 provides for citation, commencement and effect. Part 2 of these Regulations has effect for the tax year 2022-23 and subsequent tax years. Authority for the retrospective effect is given by section 3(2)(b) and 4(4) of the National Insurance Contributions (Increase of Thresholds) Act 2022 (c. 16).

Part 2 amends the Social Security (Crediting and Treatment of Contributions, and National Insurance Numbers) Regulations 2001 (S.I. 2001/769) and the Social Security (Crediting and Treatment of Contributions, and National Insurance Numbers) Regulations (Northern Ireland) 2001 (S.R. 2001 No. 102). Where self-employed earners who are treated as having paid Class 2 NICs as a result of section 11(5B) of the Social Security Contributions and Benefits Act 1992 (c. 4) and the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (c. 7) (the “1992 Acts”), are late filing information on their profits with His Majesty’s Revenue and Customs (HMRC), they are treated as having paid Class 2 NICs on the date they file for the purpose of determining entitlement to contributory benefits. This has the effect of those contributions being treated as paid late for entitlement to contributory benefits. Part 2 also amends the Social Security (Contributions) Regulations 2001 (S.I. 2001/1004) to provide that the residence and presence conditions that needed to be met 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 NICs under section 11(5B) of the 1992 Acts.

Part 3 amends the 1992 Acts, the Social Security (Contributions) Regulations 2001 and legislation on eligibility to, and calculation of, contributory benefits and council tax reductions arising from Class 2 NICs. The amendments remove legislative references and provisions relating to liability to pay Class 2 NICs so that the legislation continues to work as intended.

Part 4 saves some provisions of section 11A of the 1992 Acts which were repealed by the National Insurance Contributions (Reduction in Rates) Act 2023 (c. 57), to maintain the requirement for most self-employed earners with profits at or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 their eligibility to be treated as having actually paid Class 2 NICs under section 11(5B) of the 1992 Acts. A replacement section 11A is inserted into the 1992 Acts.

A Tax Information and Impact Note covering this instrument was published on 23rd November 2023 alongside the wider NICs rate changes announced at Autumn Statement 2023 and is available online at https://www.gov.uk/government/publications/changes-to-national-insurance-contributions-from-6-january-2024/a-reduction-in-the-main-rates-of-primary-class-1-and-class-4-national-insurance-contributions-and-the-removal-of-the-requirement-to-pay-class-2-nation. It remains an accurate summary of the impacts that apply to this instrument.