National Insurance Changes

Question.

 

I have several self-employed clients all of whom are subject to the Class 2 national insurance rules and currently pay contributions. I had been reading that Class 2 was to be abolished but now I have heard recently that this is not happening. Is this correct?

 

Answer.

 

Class 2 National Insurance Contributions are payable by the self-employed. The contributions are payable at a flat rate and entitle the contributor to short-term contributions-based employment and support allowance, maternity allowance, state pension among others.

 

The current weekly amount for 2018/19 is £2.95 and is based on whether profits are equal to or above the small profits threshold and the number of weeks of self-employment in the year. This will be determined once you submit your Personal Tax Return and it will be collected alongside your income tax liability for the year. Voluntary contributions can be made if your profits are below the threshold.

 

The Government had agreed to abolish Class 2 National Insurance contributions from 6th April 2018 but following an announcement in November 2017 this was put off to 6th April 2019. A subsequent announcement was made by the Government in September 2018 confirming that they will not proceed with the Class 2 changes following a review of evidence concerning the impact on self-employed individuals with low profits.

 

This leaves the system of paying the same as last year and there are no plans currently to reintroduce the abolition of Class 2 National Insurance. All self-employed people will have the pay the current rate of £2.95 for 2018/19 if they are above the threshold.

 

The advice above is specific to the facts surrounding the questions posed. Neither PKF-FPM nor the contributors accept any liability for any direct or indirect loss arising from any reliance placed on replies.

 

Get in touch with David Carr via email d.carr@pkffpm.com