Class 2 National Insurance (NI) abolition: simplification is welcome, but certain low-paid workers will lose out

Published on 24 February 2016

LITRG has responded to this consultation document that confirms the government’s intention to abolish Class 2 National Insurance for the self-employed and instead ensure that their eligibility for contributory state benefits is satisfied by the payment of Class 4 National Insurance.

We welcome the simplification of NI for the self-employed, who currently pay two classes of NI, in particular the proposal that certain self-employed people with low earnings might receive credits for NI purposes in a similar way to that currently enjoyed by employed people. But we note there are groups of self-employed people who, unless care is taken, might be significantly prejudiced.

We suggest that a cohesive approach to NI is required, pointing out the current inequities in the system, and stressing that any such changes will require clear communication and education for the self-employed so that they can take whatever actions are appropriate.

There are still many areas requiring to be clarified and we have suggested the earliest proposed start date of April 2017 be postponed.

The LITRG response can be found PDF icon here.

(24-02-2016)

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