Chancellor abolishes Class 2 National Insurance Contributions
18th March 2015 | News
The Government is abolishing Class 2 National Insurance Contributions (NICs), after Chancellor, George Osborne announced the changes as part of his Budget 2015 statement for the next parliament.
Class 2 NICs are the tax you have to pay if you’re self-employed and making more than £5,885 profit a year.
At present, Class 2 NICs amount to £2.75 a week; however those self-employed who earn below the £5,885 threshold are eligible to apply for exception. Applications that are approved are currently issued with a Certificate of Small Earnings Exception.
However, the five million-strong army of self-employed workers will all benefit from the eradication of Class 2 NICs going into next year.
Mr Osborne also confirmed that there will be reforms to Class 4 NICs too, which is the tax paid by those making a profit of more than £7,956 a year.
Further consultations on the changes to NICs are set to be announced in due course.
Mr Osborne also raised the tax-free personal allowance for professionals to £11,000 next year, and promised the higher-rate threshold will rise “above inflation” by 2017-18, providing a tax cut for around 27 million people.
“Britain is walking tall again,” said Osborne.
“Five years ago I said we would turn Britain around. I will not waver from that task, we choose the future.”