Class 2 NIC will not be abolished from 6 April 2019 as previously announced by the Treasury.
National insurance contributions (NIC) are complicated for the self-employed, having 2 classes (2 and 4) paid on different bands of income and at different rates.
Class 2 NICs is paid by the self-employed if the annual profit is over £6,205 and costs a maximum of £153.40 per year (2018/19). It provides some entitlement to the state pension and other state benefits. Class 4 costs more, with no upper limit, and provides no right to state benefits. It is just a tax on profits.
The Treasury realised that changes needed to occur back in July 2013, and some streamlining has taken place. Class 2 is now collected, alongside Class 4, with tax due under self-assessment. The aim was to merge the 2 classes to make it even simpler from 6 April 2019 (put back from April 2018!). However, this will not now be the case.
The reasons for this are unclear and whatever they are, the NIC system will remain as is at present and we shall have to wait to see if further changes will be made in future.
If you would like further assistance or guidance on this then please contact us on 0113 2864486.
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