Government abandons abolition of self-employed national insurance
Well. Would you Adam and Eve it.
After 2 years of toing and froing over Class 2 national insurance, the government has announced sole traders will continue to pay it after all.
In practical terms it means most sole traders will be paying about £150 more in NI than they thought they would for 2019-2020.
NI nerds will remember that Class 2 was meant to be abolished in April 2019 to make things simpler. (See my early posts.)
But, as countless participants pointed out during our Finance for Freelancers courses, what about your national insurance record? Without Class 2 the lowest earning sole traders would have no NI contributions, and therefore potentially no state pension unless they forked out a lot more money.
To quote the Exchequer Secretary to the Treasury:
“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. 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.”
You can read the whole statement here.
I’m off to update my slides and handouts. Again.
Posted on 10 September 2018