If you’re self-employed, you may have spotted something odd on your 2024/25 tax calculation. Some people have been charged Class 2 National Insurance contributions in error – even though the rules changed from 6 April 2024.
So, what’s gone wrong, who’s affected, and how can you make sure your tax bill is correct? Let’s break it down.
A Quick Refresher: What Changed in April 2024?
From 6 April 2024, Class 2 National Insurance was effectively abolished as a compulsory charge. Here’s how things now work:
- If your profits are below the Small Profits Threshold (£6,725 for 2024/25), you can choose to pay voluntary Class 2 contributions to secure qualifying years for your State Pension or other benefits. This is charged at £3.45 per week, or £179.40 for the year.
- If your profits are between £6,725 and £12,570, you’ll get a National Insurance credit – no Class 2 payment required.
- If your profits are over £12,570, you’ll only pay Class 4 contributions, not Class 2.
The Problem: Errors in 2024/25
Despite the changes, some self-employed taxpayers have been charged Class 2 NIC in error for 2024/25.
The issue varies depending on the individual:
- Some with profits over £12,570 have been incorrectly billed £358.80 – that’s double the voluntary Class 2 charge.
- Others have seen smaller incorrect amounts appear.
If this sounds familiar, don’t panic – you’re not alone.
What’s Being Done to Fix It?
HMRC have confirmed they’re aware of the issue and are working on it. Here’s the latest update:
- Where possible, HMRC have already corrected the errors. Some taxpayers have noticed their Self Assessment calculation (SA302) has reverted back to the right figure.
- Unfortunately, HMRC’s IT systems won’t be fully fixed until September 2025. Until then, incorrect Class 2 letters may still be sent out.
- If you’ve already paid an incorrect Class 2 charge, HMRC will refund the payment or add a credit to your Self Assessment account once the error is resolved.
What Should You Do?
- If you haven’t yet submitted your 2024/25 tax return, it may be worth waiting until HMRC fully resolves the issue. You have until 31 January 2026.
- If you have already submitted your return, check your calculation carefully. If it’s wrong, HMRC should correct it – but keep an eye on your account to make sure.
- If you’ve received an unexpected Class 2 bill, don’t just pay it – make sure it’s genuine.
Need a Hand?
Tax rules are complicated enough without IT glitches causing extra stress. If you’re unsure whether you’ve been affected, or you want peace of mind that your return is correct, we’re here to help.
Contact Jon and the team at Jon Davies Accountants today, and we’ll make sure you’re on the right track.
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Any questions?
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