What's Happening With Class 2 National Insurance?
It's the tax question of the week ...
POSTED BY ROGER EDDOWES ON 17/09/2018 @ 8:00AM
The Chancellor has been mulling over some changes to Class 2 National Insurance. Originally they were going to be abolished, then they were going to be raised. So, what changes are happening now?
What's happening with Class 2 National Insurance?
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Class 2 National Insurance is payable by anyone who is self-employed. These contributions are a flat weekly rate and mean the contributor is entitled to employment and support allowance, maternity allowance, widowed parent's allowance, state pension and bereavement benefits.
The Government had planned to abolish Class 2 National Insurance from 6th April 2018, but the Chancellor announced in last November's budget that it was to be delayed until 6th April 2019 instead.
Last month, it was announced that Class 2 National Insurance was now going to continue beyond that date following a review concerning the impact on self-employed people with low profits.
The review concluded that self-employed people with low profits would see their voluntary contribution rise significantly to ensure they were still entitled to the various benefits mentioned above.
A Treasury spokesman said, "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.
Furthermore, it has become clear that, to the extent that the government could address these concerns, the options identified introduce greater complexity to the tax system, undermining the original objective of the policy."
So, there you go, the change to Class 2 National Insurance has been cancelled and there are no plans to abolish it anytime soon!
"Would you like to know more?"
If you're self-employed and a little confused about your Class 2 National Insurance contributions, then do give me a call on 01908 774320 or click here to ping me an email and let's see how I can help you.
Until next time ...
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Roger trained at Edward Thomas Peirson & Sons in Market Harborough before working at Hartwell & Co, followed by Chancery, as a partner. He started Essendon Accounts and Tax with Helen Beaumont in 2014 as a general practitioner with a hands-on approach.
Roger loves ‘getting his hands dirty’, working with emerging, small-to-medium and family businesses to ensure they receive the best possible accountancy advice. Roger utilises an extensive network of business contacts to leverage the best guidance and practical solutions.