George Osbourne originally proposed the abolition of class 2 NIC while he was Chancellor. This was planned for 6 April 2018, but was then delayed until 6 April 2019.
Class 2 NIC is paid by self-employed taxpayers at a flat rate per week. As a result, it is a regressive levy, hitting lower earners more, there is no tapering or means testing applied to it.
Abolishing this was intended to simplify the tax system and to give the self-employed greater access to certain contributory benefits such as state pension, employment and support allowance and bereavement benefit.
The latest news is that the proposed changes are to be abandoned.
After reviewing evidence, the Government says that it has ‘listened to those affected and have concluded that the changes would have a negative impact on the lowest earners’.
In reality, the U turn will save the Government £360 million for the next three years, per the original impact assessment!
For more information please contact Lesley Sutton on 01484 550037 or email email@example.com