Issues with Class 2 National Insurance Contributions and Time to Pay arrangement

Senga Prior

Senga Prior

Tax Senior Manager

If you have Class 2 National Insurance Contributions (NIC) to pay and have entered into a Time to Pay arrangement (TTP), or did not pay your liability in full, then you may find yourself facing issues if you wish to claim any contributory benefits.

If you had taken advantage of the July payment on account deferral or had other amounts overdue at 31 January 2021 then these amounts will be settled first.

This may result in the Class 2 NIC being settled at a much later date and may affect any contributory based benefit claims you may wish to make.

HMRC have stated that if they are contacted, they may be able to reallocate the earliest possible payment to Class 2 NIC but this will not happen automatically. You should contact HMRC as soon as possible if affected or speak to your adviser.

TTP can be set up online if up to £30,000 is owed. If set up by 2 March 2021, this will avoid the first late payment penalty and the 6 month and 12 month late penalties will also be avoided, if all tax owing under the TTP is paid in time. Interest will still be charged on outstanding amounts currently 2.6%.

Contact us

If you would like to discuss this further, please do not hesitate to get in touch with myself or a member of our Tax team.

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