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What do I do about National Insurance?

As soon as you decide to set up a freelance business, whether full or part time, you need to let HMRC know by completing the relevant form, and they will send you a quarterly bill for what is known as ‘Class 2’National Insurance. This is a basic payment which ensures that you pay enough to cover your future state pension requirements. All additional National Insurance payments (Class 4) are calculated by your accountant when your end of year figures are completed, and the amount owed is included in your tax bill.

If you have income from more than one job – e,g, if you are freelancing whilst still in permanent employment you should take care to ensure you are not paying more in NI contributions than you need to! If you think you may be exceeding the upper limit then you can apply for deferment of contributions.