The government has decided Class 2 National Insurance Contributions (NICs) are here to stay and will not be abolished from April 2019.
Class 2 National Insurance Contributions are currently paid at a rate of £2.95 per week by self-employed individuals with profits of £6,205 or more per year.
There were plans to scrap the Class 2 contribution and the government were investigating ways in which self-employed individuals with low profits, could maintain their State Pension entitlement if this small contribution had been abolished.
Robert Jenrick, Exchequer Secretary to the Treasury, stated in a written statement to MPs, that:
‘This change was originally intended to simplify the tax system for the self-employed.
We delayed the implementation of this policy in November to consider concerns relating to the impact on self-employed individuals with low profits.
We have since engaged with interested parties to explore the issue and further options for addressing any unintended consequences.’
‘A significant number of self-employed individuals on the lowest profits would have seen the voluntary payment they make to maintain access to the State Pension rise substantially.
Having listened to those likely to be affected by this change we have concluded that it would not be right to proceed during this parliament, given the negative impacts it could have on some of the lowest earning in our society.’
Source link: Parliament statement