skip to navigationskip to main content

Phone: 0141 248 7411 

Email:

Choosing a Service

Choosing an accountant that matches your needs

Sectors

Robb Ferguson provides specialist advice for...

icon-free-consultation

Free Initial Consultation

Understanding your accountancy requirements

Request a Callback

Lets talk at a more convenient time for you

Abolition of Class 2 NICs delayed

Newsletter issue - December 2017.

On 2 November 2017, the Government announced a one year delay to the abolition of Class 2 National Insurance Contributions (NICs). Class 2 NICs will now be abolished from 6 April 2019 rather than 6 April 2018.

The delay will allow time for the government to engage with interested parties and Parliamentarians with concerns relating to the impact of the abolition of Class 2 NICs on self-employed individuals with low profits.

The relevant legislation will be contained in the National Insurance Contributions (NICs) Bill, which will now be introduced in 2018 with the measures it will implement taking effect one year later, from April 2019. These measures include the abolition of Class 2 NICs, reforms to the NICs treatment of termination payments and changes to the NICs treatment of sporting testimonials.

Broadly, Class 2 NICs are being removed to simplify the system. Those with profits below the small profits threshold (£6,025) will need to pay Class 3 contributions, which are five times as much as Class 2 contributions, if they wish to build up an entitlement to contributory benefits such as the state retirement pension. Based on 2017/18 rates, the proposed change would mean that people falling into this category would pay £592.80 a year more in Class 3 contributions.

According to the Office for National Statistics, there were 967,000 people with an annual income from self-employment below the small profits threshold in 2015/16. The proposals, as they currently stand, potentially impact on a considerable number of people.

Commenting on the delay, the Low Incomes Tax Reform Group (LITRG) said it was keen for a way to be found for the low-income self-employed to continue to be able to make affordable savings towards their pension at a rate similar to the present Class 2, perhaps by introducing a lower rate Class 3.

Not everything is equal – true. But maybe being equal is simply not good enough?

Our Philosophy

We’re a dedicated team which strives to provide success to our clients in regards to all their accountancy needs.

Meet our team