The government has decided not to proceed with plans to abolish class 2 NICs from April 2019. Originally proposed at Budget 2016 for implementation in April 2018, a one-year delay had been announced in November 2017 to allow more time to consider concerns about the impact on self-employed individuals with low profits.
In a written statement on 6 September, the Treasury exchequer secretary, Robert Jenrick, explained that: ‘A significant number of self-employed individuals on the lowest profits would have seen the voluntary payment they make to maintain access to the state pension rise substantially.’ The government had therefore decided ‘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’.
The statement adds that the government ‘will keep this issue under review in the context of the wider tax system and the sustainability of the public finances’.
Legislation to reform the treatment of termination payments and income from sporting testimonials, first published in the draft NICs Bill on 5 December 2016, is still expected to go ahead in a National Insurance Contributions Bill later this year.
Anne Fairpo, chair of the Low Incomes Tax Reform Group (LITRG), welcomed the indication from government that it intends to keep the issue under review. ‘Public understanding of NI is low,’ she said, ‘and we do need to keep looking for ways to make it much simpler to manage.’
‘We would like to see the whole system of national insurance reconsidered, rather than tinkering and piecemeal changes. This is especially important given the ever-increasing numbers of self-employed workers,’ Fairpo added.
The government has decided not to proceed with plans to abolish class 2 NICs from April 2019. Originally proposed at Budget 2016 for implementation in April 2018, a one-year delay had been announced in November 2017 to allow more time to consider concerns about the impact on self-employed individuals with low profits.
In a written statement on 6 September, the Treasury exchequer secretary, Robert Jenrick, explained that: ‘A significant number of self-employed individuals on the lowest profits would have seen the voluntary payment they make to maintain access to the state pension rise substantially.’ The government had therefore decided ‘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’.
The statement adds that the government ‘will keep this issue under review in the context of the wider tax system and the sustainability of the public finances’.
Legislation to reform the treatment of termination payments and income from sporting testimonials, first published in the draft NICs Bill on 5 December 2016, is still expected to go ahead in a National Insurance Contributions Bill later this year.
Anne Fairpo, chair of the Low Incomes Tax Reform Group (LITRG), welcomed the indication from government that it intends to keep the issue under review. ‘Public understanding of NI is low,’ she said, ‘and we do need to keep looking for ways to make it much simpler to manage.’
‘We would like to see the whole system of national insurance reconsidered, rather than tinkering and piecemeal changes. This is especially important given the ever-increasing numbers of self-employed workers,’ Fairpo added.
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