Set up and register as self-employed

Arranging to make National Insurance contributions

As well as registering as self-employed you'll need to arrange to pay Class 2 National Insurance contributions (NICs), unless you expect your earnings to be very low - see the later sub-section if this applies to you. For the tax year 2009-10 the Class 2 NICs rate is £2.40 a week.

The most convenient way to pay Class 2 NICs is via direct debit. Paying by Direct Debit has many advantages:

• it's easy to set up - just fill in the application form and send it to HM Revenue & Customs (HMRC) - you will need a suitable account at a bank or building society
• it runs automatically - once set up, you don't have to remember to make payments
• it helps your budgeting - for people in business, good cash flow and budgeting are essential and paying by Direct Debit means that you have to plan for only one month's payment in arrears
• it gives you peace of mind - payments are made on time, every time and there is no risk of losing benefit because you forgot to pay

Find an application form to pay Class 2 NICs by direct debit on the HMRC website - Opens in a new window.

If you are unable to pay by Direct Debit, HMRC will issue you with quarterly bills in January, April, July and October.

Applying to be exempt from paying Class 2 NICs

If you expect your income from your business to be low for the tax year you may not have to pay Class 2 NICs. To find out more please download form CF10 Self-employed people with small earnings.

Find form CF10 for self-employed people with small earnings on the HMRC website - Opens in a new window.

You can also find more information in our guide on Class 2 National Insurance contributions.

Subjects covered in this guide

• Introduction
• Before you start
• How and when to register
• Arranging to make National Insurance contributions
• Self-employment status
• Checklist: setting up as self-employed

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