Monday, December 19, 2016
Wednesday, December 7, 2016
Abolishment of Class 2 NI from 6 April 2018
From 6 April 2018 Class 2 contributions will be abolished and
Class 4 contributions reformed to include a new threshold (to be called the
Small Profits Limit).
The self-employed currently have to work with two separate
classes of NICs, the Class 2 NI
and the Class 4 NI. You usually pay 2 types of National Insurance if you’re
self-employed:
On Class 2 a self employed pays £2.80 a week if your profits are
£5,965 or more a year
On Class 4 9% if your
profits between £8,060 to £43,000
or 2% on profits over £43,000 more a year
This measure will mean that from April 2018 they will only have
to engage with one class of NICs,
delivering a simpler overall regime for the self-employed. In particular this
will have a positive impact on sole traders, small partnerships and
unincorporated enterprises with profits above the new Small Profits Limit. .
For those with profits above the Small Profits Limit this measure is likely to
have a positive impact as they will now only have to deal with one Class of
contributions (Class 4) instead of Class 2 and Class 4 contributions reducing
system complexity.
All those with profits at or above the Class 4 Small Profits
Limit will gain access to the new State Pension, contributory Employment and
Support Allowance (ESA) and Bereavement Benefit.
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