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Treasury scraps plans to abolish class 2 NICs

Class 2 national insurance contributions (NICs) will no longer be abolished in April 2019, the government has announced.

The Treasury was originally set to scrap class 2 NICs, which are paid by self-employed people with profits of £6,205 or more a year, in April 2018.

In November 2017, this plan was delayed until April 2019, but has now been retracted altogether.

In a written statement, Treasury minister Robert Jenrick said class 2 NICs will not be abolished during this parliament, amid concerns of negatively impacting on self-employed individuals with lower profits.

Self-employed workers earning less than £6,205 in 2018/19 can protect their entitlement to certain benefits and the state pension by paying voluntary class 2 NICs at a flat rate of £2.95 a week.

Jenrick said if class 2 NICs were abolished, these workers would see their voluntary payments "rise substantially".

He also said the change would "introduce greater complexity to the tax system".

Mike Cherry, chairman of the Federation of Small Businesses, said the self-employed community had been "let down" by the decision.

Cherry said:

"Rather than hitting more than 3 million self-employed people with this levy, the Treasury should have worked harder to develop more effective ways to protect around 300,000 low-earners and maintain their contributions for the state pension.

"The self-employed were promised that this niggling tax would end but have been left high and dry."

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