The government has made the announcement that it will be delaying the abolition of Class 2 National Insurance Contributions.
This news has been welcomed by the Low Incomes Tax Reform Group (LITRG), as when Class 2 NICs are stopped, those an income below the small profits threshold (currently £6,025) will have to pay Class 3 contributions, which are five times as much as Class 2 contributions, if they want to build up an entitlement to contributory benefits such as the state retirement pension.
LITRG is keen for a new method that will allow the low-income self-employed to continue to be able to make affordable savings towards their pension at a rate similar to the present Class 2, perhaps by introducing a lower rate of Class 3.
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I want to be a contractorLITRG Chair Anne Fairpo, commented, “We welcome the announcement by the Government that they intend to consult with organisations such as ours which have concerns relating to the impact of the abolition of Class 2 NICs on self-employed individuals with low profits. We look forward to working with the Government to lessen the risk of unintended consequences.
“The abolition of Class 2 NICs will be a significant change to how people contribute to qualify for certain benefits and the State Pension.
“We welcome the breathing space on this matter because of our concerns that the abolition of Class 2 was being rushed through without adequate further consultation, together with a lack of publicity and guidance for the people affected.”
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