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Employed and self employed? Are you paying too much national insurance?

Posted by: edwinsmith on February 26th, 2013

If you are employed and also have a self employment you can avoid overpaying national insurance contributions by deferring some of your class 2 and/or class 4 national insurance contributions. 

You can apply to defer class 2 contributions if you expect to pay

  1. Both class 1 and 2 contributions in a tax year
  2. Class 1 contributions on weekly employment earnings of at least £797 in 2013/14 for the whole tax year, (£817 in 2012/13)

You may be able to defer your Class 4 National Insurance contributions if you can show that you're likely to pay too much in Class 1, Class 2 and Class 4 contributions. However, you will still have to pay class 4 contributions at the rate of 2% on any profits over the lower profits limit £7,755 in 2013/4, ( £7,605 in 2012/13).

Deferment applications should be done before the beginning of the tax year to which they relate. HMRC will accept late applications until the end of the tax year to which they relate. However, applications received AFTER the end of the tax year will only be considered for deferral of class 4 contributions. You have to re-apply for each tax year that you want to defer contributions and renewals for 2013/14 are currently being sent out. By 5 April 2013 you should submit your 2012/13 and 2013/14 applications.

You can obtain form CA72B for 2012/13 on HMRC website to complete. If your self employed earnings are lower than the small earnings exception limit of £5,595 you should complete form CF10.

If you require further help please contact us