Contact Us

The UK Government has announced it will not be scrapping Class 2 National Insurance contributions (NICs) for the self-employed during this parliament.

A planned tax cut for over three million self-employed professionals was planned by former Chancellor, George Osborne.

At the time, the Treasury predicted the move would give millions of self-employed people an annual tax cut of £134 on average.

Alarm bells were ringing about the likelihood of Class 2 NICs being abolished last autumn, when the Government agreed to delay their abolition by 12 months.

Those fears came true yesterday when the Government confirmed that the plans had now been shelved during the term of this parliament.

The original plan was to scrap Class 2 NICs paid by self-employed individuals earning £6,205 or more a year. However, the Government cited concerns that in doing so they would hit 300,000-plus self-employed people earning less than £6,205 a year who pay Class 2 NICs voluntarily to gain access to their state pension.

These people would have been expected to pay Class 3 NICs instead, increasing their weekly payments from £2.95 to £14.65.

The decision has disappointed many, including the Federation of Small Businesses (FSB), which views this as a form of tax grab from the Treasury, netting them “more than £350m annually in the three years to 2021”.

Mike Cherry, Chairman, FSB, insists the Treasury “should have worked harder” to find ways to look after low-earners.

“The self-employed community has been let down today, missing out on a promise to reduce their tax burden,” added Cherry.

“This raises serious questions once again about the government’s commitment to supporting the self-employed.

“Class 2 NICs is a regressive levy that indiscriminately hits sole traders and makes life even tougher for those who are hard-up.”

Nevertheless, Treasury Minister, Robert Jenrick insists that the Government “remains committed to simplifying the tax system for the self-employed”.

“[The Government] will keep this issue under review in the context of the wider tax system and the sustainability of the public finances,” added Jenrick.

Date published 7 Sep 2018 | Last updated 7 Sep 2018

Choose the right accounting firm for you

Running your own business can be challenging so why not let TaxAssist Accountants manage your tax, accounting, bookkeeping and payroll needs? If you are not receiving the service you deserve from your accountant, then perhaps it’s time to make the switch?

Local business focus icon

Local business focus

We specialise in supporting independent businesses and work with 80,684 clients. Each TaxAssist Accountant runs their own business, and are passionate about supporting you.

Come and meet us icon

Come and meet us

We enjoy talking to business owners and self-employed professionals who are looking to get the most out of their accountant. You can visit us at any of our 409 locations, meet with us online through video call software, or talk to us by telephone.

Switching is simple icon

Switching is simple

Changing accountants is easier than you might think. There are no tax implications and you can switch at any time in the year and our team will guide you through the process for a smooth transition.

See how TaxAssist Accountants can help you with a free, no obligation consultation

0800 0523 555

Or contact us