Class 2 NI contributions – will continue in 2019

The government has announced that Class 2 National Insurance contributions (NIC) will not be abolished in the current parliament. It had been due to be abolished in April 2019.

Class 2 NIC is payable on self-employed profits, currently at the rate of £2.95 per week. There is no liability if profits are below the small profits threshold, currently £6,205 per year. However, in that situation the individual can pay Class 2 NIC voluntarily, in order to maintain their NIC record and entitlement to the state pension and other contributory benefits.

The announcement that Class 2 will not be abolished in the current parliament was made in a written statement on 6 September 2018 by Robert Jenrick MP, the Exchequer Secretary to the Treasury.

The main reason given is concern about the impact the change would have on self-employed people with low profits. Once Class 2 was abolished, such people could still pay NICs voluntarily in order to maintain their NIC record, but this would have to be at the higher Class 3 rate (currently £14.65 per week).

The statement notes that although the abolition of Class 2 NICs was intended to simplify the tax system for the self-employed, the options to avoid the impact on low earners “introduce greater complexity to the tax system, undermining the original objective of the policy”.

The government has been looking at reform of NIC for the self-employed for some time. The proposed abolition had already been postponed from the original planned date of April 2018. The intention was that the abolition of Class 2 would be accompanied by an increase in Class 4 NIC, which is payable on profits over £8,424 per year.

The government says it will keep the issue under review “in the context of the wider tax system and the sustainability of the public finances”.

The government still intends to legislate for reforms to the NIC treatment of termination payments and income from sporting testimonials, set out in the draft NICs Bill published on 5 December 2016, which are intended to ensure the NICs treatment is consistent with the treatment of income tax in previous Finance Acts.

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Self Employed National Insurance – info for 2019/2020

NEWS on the application of National Insurance rates from Accounting Web:

Classes 2 and 4 NIC were to be merged from 6 April 2018, with class 2 NIC abolished from that date. This merger will now take place from 6 April 2019.

Delay

In a written statement to the House of Commons released late yesterday, it was announced that the abolition of class 2 national insurance contributions (NIC) would be delayed by one year to 6 April 2019. This delay was justified by a need to consult more fully with interested parties in respect of the effect of the abolition of class 2 NIC on lower earners.

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National Insurance – check your state pension

NATIONAL INSURANCE PAYMENTS are part of all taxpayers’ lives. As they’re currently under governmental review in some areas, let’s look at some of the overall information from the HMRC website.

Use this service to find out:

  • how much State Pension you could get (this amount is also known as your State Pension forecast)
  • when you can get it
  • how to increase it, if you can

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National Insurance – check your NIC record

NATIONAL INSURANCE PAYMENTS are part of all taxpayers’ lives. As they’re currently under governmental review in some areas, let’s look at some of the overall information from the HMRC website.

Check your National Insurance record

You can check your National Insurance record online to see:

  • what you’ve paid, up to the start of the current tax year (6 April 2017)
  • any National Insurance credits you’ve received
  • if gaps in contributions or credits mean some years don’t count towards your State Pension (they aren’t ‘qualifying years’)
  • if you can pay voluntary contributions to fill any gaps and how much this will cost

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National Insurance – current rates and how to pay

NATIONAL INSURANCE PAYMENTS are part of all taxpayers’ lives. As they’re currently under governmental review in some areas, let’s look at some of the overall information from the HMRC website.

How much you pay

The amount of National Insurance you pay depends on your employment status and how much you earn.

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National Insurance – the classes

NATIONAL INSURANCE PAYMENTS are part of all taxpayers’ lives. As they’re currently under governmental review in some areas, let’s look at some of the overall information from the HMRC website.

National Insurance classes

The class you pay depends on your employment status and how much you earn, and whether you have any gaps in your National Insurance record.

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National Insurance – an overview

NATIONAL INSURANCE PAYMENTS are part of all taxpayers’ lives. As they’re currently under governmental review in some areas, let’s look at some of the overall information from the HMRC website.

Overview

You pay National Insurance contributions to qualify for certain benefits and the State Pension.

You pay National Insurance if you’re 16 or over and either:

  • an employee earning above £157 a week
  • self-employed and making a profit of £6,025 or more a year

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