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September 24. 2018

Why Class 2 is Important

Many clients ask us why they should volunteer to pay Class 2 National Insurance and we always give the same answer: “Class 2 is the only National Insurance Contributions a self-employed person pays that counts towards their State Pension and other State Benefits”. To get a full state pension a person must have 30 years’ worth of contribution, for employees this is Class 1, for Sole Traders or Partners this is Class 2. Class 2 is currently based on a weekly amount of £2.95 a week, which is calculated and collected through the individuals’ tax return.  
 
As you approach retirement age it is wise to request a state pension forecast which shows how many years contributions you have and any shortfall. To fill the shortfall an individual has to pay Class 3 National Insurance which is currently £14.65 a week. This is obviously a very significant difference which shows why it’s in your best interest to volunteer to pay Cass 2.

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