This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at https://www.theguardian.com/money/2017/nov/02/government-delay-to-nics-changes-for-self-employed-welcomed
The article has changed 5 times. There is an RSS feed of changes available.
| Version 3 | Version 4 |
|---|---|
| Government delay to NICs changes for self-employed welcomed | Government delay to NICs changes for self-employed welcomed |
| (11 days later) | |
| Campaigners have welcomed a government decision to delay a national insurance change that will leave some low-earning self-employed people facing a 400% increase in their costs if they want to retain their right to a state pension. | Campaigners have welcomed a government decision to delay a national insurance change that will leave some low-earning self-employed people facing a 400% increase in their costs if they want to retain their right to a state pension. |
| The Treasury has also suggested that it may consider measures to help those affected, who include part-time tutors and hairdressers. Several hundred thousand self-employed people who earn less than £6,000 a year could be hit. | The Treasury has also suggested that it may consider measures to help those affected, who include part-time tutors and hairdressers. Several hundred thousand self-employed people who earn less than £6,000 a year could be hit. |
| The government had previously announced its intention to abolish “class 2” national insurance contributions (NICs) for the self-employed in April 2018, but has now said it will delay the move for a year. | The government had previously announced its intention to abolish “class 2” national insurance contributions (NICs) for the self-employed in April 2018, but has now said it will delay the move for a year. |
| The Treasury said this would provide more time to engage with MPs, campaigners and others who had raised concerns about how the abolition would affect self-employed people on low earnings. | The Treasury said this would provide more time to engage with MPs, campaigners and others who had raised concerns about how the abolition would affect self-employed people on low earnings. |
| The abolition means that many of Britain’s lowest-earning self-employed workers will either have to pay an extra £593 a year or lose their entitlement to a state pension. There have been claims that the change could disproportionately affect women. | The abolition means that many of Britain’s lowest-earning self-employed workers will either have to pay an extra £593 a year or lose their entitlement to a state pension. There have been claims that the change could disproportionately affect women. |
| Class 2 NICs are payable at a rate of £2.85 per week for self-employed people who earn more than £6,025, the so-called small profits threshold, in 2017-18. | Class 2 NICs are payable at a rate of £2.85 per week for self-employed people who earn more than £6,025, the so-called small profits threshold, in 2017-18. |
| Those who earn less than that amount can choose to pay class 2 NICs in order to gain entitlement to a state pension, meaning that some are voluntarily paying £148.20 a year. | Those who earn less than that amount can choose to pay class 2 NICs in order to gain entitlement to a state pension, meaning that some are voluntarily paying £148.20 a year. |
| As things stand, they will have to either pay class 3 voluntary contributions from April 2019, at a cost of £741 a year at current rates, or effectively give up their entitlement to a state pension. That amounts to a 400% increase. | As things stand, they will have to either pay class 3 voluntary contributions from April 2019, at a cost of £741 a year at current rates, or effectively give up their entitlement to a state pension. That amounts to a 400% increase. |
| Jane Clark (not her real name), a self-employed maths tutor earning around £2,500 a year, contacted the Guardian in March. She said at the time that the extra money she would have to pay to secure her right to a state pension represented a sizable chunk of her earnings. | Jane Clark (not her real name), a self-employed maths tutor earning around £2,500 a year, contacted the Guardian in March. She said at the time that the extra money she would have to pay to secure her right to a state pension represented a sizable chunk of her earnings. |
| She said: “It’s going to affect mostly women. I’d say probably older women whose husbands work or are retired, and who are suddenly going to have this huge change put upon them, for example, if you have a husband working who earns enough so that you don’t get tax credits.” | She said: “It’s going to affect mostly women. I’d say probably older women whose husbands work or are retired, and who are suddenly going to have this huge change put upon them, for example, if you have a husband working who earns enough so that you don’t get tax credits.” |
| The change only affects self-employed people whose earnings are below the small profits threshold, but data from the Office for National Statistics issued earlier this year showed there were 967,000 such people in 2015-16. | The change only affects self-employed people whose earnings are below the small profits threshold, but data from the Office for National Statistics issued earlier this year showed there were 967,000 such people in 2015-16. |
| Not all will be adversely affected. Those with earnings below the small profits threshold, but who are eligible for national insurance credits, would continue to build up qualifying years for the state pension. This typically includes people who receive certain benefits and parents of younger children. | Not all will be adversely affected. Those with earnings below the small profits threshold, but who are eligible for national insurance credits, would continue to build up qualifying years for the state pension. This typically includes people who receive certain benefits and parents of younger children. |
| The Treasury said it was committed to abolishing class 2 NICs to simplify the system, but that it wanted to take the time to ensure there were no unintended consequences for the lowest-paid. | The Treasury said it was committed to abolishing class 2 NICs to simplify the system, but that it wanted to take the time to ensure there were no unintended consequences for the lowest-paid. |
| The Low Incomes Tax Reform Group (LITRG) of the Chartered Institute of Taxation said of the Treasury’s move: “This is a welcome announcement that shows the government is listening.” | The Low Incomes Tax Reform Group (LITRG) of the Chartered Institute of Taxation said of the Treasury’s move: “This is a welcome announcement that shows the government is listening.” |
| It said that when class 2 NICs are abolished, those affected would have to pay “five times as much as now” to build up an entitlement to contributory benefits such as the state pension. | It said that when class 2 NICs are abolished, those affected would have to pay “five times as much as now” to build up an entitlement to contributory benefits such as the state pension. |
| National insurance | National insurance |
| Economic policy | Economic policy |
| Tax | Tax |
| Work & careers | Work & careers |
| news | news |
| Share on Facebook | Share on Facebook |
| Share on Twitter | Share on Twitter |
| Share via Email | Share via Email |
| Share on LinkedIn | Share on LinkedIn |
| Share on Pinterest | Share on Pinterest |
| Share on Google+ | Share on Google+ |
| Share on WhatsApp | Share on WhatsApp |
| Share on Messenger | Share on Messenger |
| Reuse this content | Reuse this content |