Changes to national insurance for freelancers of all types

Last Updated on 24 November 2023

Chancellor Jeremy Hunt at the dispatch box

It was Jeremy Hunt’s turn in the spotlight on Tuesday 22 November 2023.

As Chancellor he was making an autumn statement about upcoming changes, including to some taxes.

The most significant change is to national insurance contributions, which are a kind of tax for working people.

Attention sole traders!

sole trader

For sole traders one of the NI types, ‘Class 2’, has effectively become voluntary.

If your profits from sole trader work are more than £6,725 you will have an NI credit on your national insurance record.

If you have lower profits you won’t get a national insurance credit, but if you need to keep your national insurance record up to date you can pay Class 2 voluntarily. The rate for 2024-25 is £3.70 per week that you were registered as a sole trader. (Up from £3.45 in 2023-24.)

This will be useful if you have no other way of making NI contributions.

But for people who are also earning PAYE income, they will normally be keeping up their NI record because their employer will be making NI deductions for them. So they might not need to make any Class 2 contributions on top of that.

This change to Class 2 NI comes in for the tax year 2024-25.

Class 1 NI and Class 4 NI remain in place with the same thresholds, but the percentages go down for the main headline rate of NI.

If you’re a sole trader everything will be automatically reflected and calculated on your self-assessment form at the end of the tax year.

PAYE changes

PAYE freelancer

Interestingly, Class 1 NI for employees and PAYE freelancers will go down from 6 January 2024.

It’s very unusual for taxes to be reduced within the current tax year. Normally there’s much more notice.

Anyone would think they’re in a hurry to give us some money.

I’ll be updating all the training resources which existing trainees have come to expect!

I’ve already added a note to the top of Help sheet 3, tax and NI. (3s for Scottish residents)

Help sheet 3 – Tax and NI for residents of England, Wales, Northern Ireland >
Help sheet 3s – Tax and NI for residents of Scotland >

You can read much more detail on this page on…/autumn-statement-2023-national-insurance-factsheet >

NB: David Thomas Media Ltd is not responsible for the content of other sites nor any financial advice provided by them.

Posted on 24 November 2023

  1. Joanne O’Brien said:

    Thanks so much for clear information on NI David, much appreciated.
    I really enjoy your newsletter, you communicate in such an interesting and effective way.
    Happy Christmas and best wishes for 2024

    • David said:

      That’s very kind of you Joanne. I hope you have a lovely Christmas break and enjoy a happy and peaceful 2024.

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