Economy

Govt delays NICs changes for self-employed

Govt delays NICs changes for self-employed”

A tax cut hailed as a boost for Britain's army of self-employed people has been shelved, in another Government U-turn.

The Low Incomes Tax Reform Group (LITRG), a Chartered Institute of Taxation (CIOT) initiative, hopes there may be a way for the low-income self-employed to continue to be able to make savings towards their pension at a rate like the present Class 2, possibly by introducing a lower rate of Class 3.

The move is expected to save the Chancellor, Philip Hammond, around £200m, just weeks before a crucial Budget and as he tries to plug a yawning financial "black hole". Those workers affected will be about £130 a year worse off as a result.

"The abolition of Class 2 NICs was a speck of bright light in an otherwise gloomy picture for the self-employed".

The policy, which was first unveiled by Mr Hammond's predecessor George Osborne in 2016, would have seen 3.6million self-employed workers paying less in National Insurance.

"The government needs to makes sure that those now paying Class 2 NICs, including many low-earning self-employed people, are not hit hard as a result of their abolition and replacement".

The system requires those who work for themselves to fill out forms and pay around £2.60 a week on average.

For those earning below £6,025, they do not automatically pay the £2.85 a week class 2 rate, but pay optional class 2 NICs to gain state pension entitlement.

The Treasury has announced a one-year delay to the abolition of Class 2 National Insurance Contributions (NICs) for the self-employed in a move welcomed by campaigners.

The changes were slipped out in a written ministerial statement by Andrew Jones, the exchequer secretary to the Treasury.

The government previously said it would get rid of Class 2 NICs for the self-employed, which amount to £2.85 per week for these workers, but now this take place in April 2019 not 2018, according to reports.



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