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 2011-12 the Class 2 NICs rate is £2.50 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
• you can choose to pay monthly or six monthly
• it helps your budgeting - for people in business, good cash flow and budgeting are essential and paying by Direct Debit means that your payments are always made in arrears of your liability
• 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 bill reminders in April and October showing the amount due by 31 July and 31 January respectively.

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.