Change is on the horizon \u2013 from April next year, the self-employed will only pay one Class of National Insurance rather than the two currently payable.<\/p>\n
Change is on the horizon \u2013 from April next year, the self-employed will only pay one Class of National Insurance rather than the two currently payable.<\/p>\n
Current position<\/strong><\/p>\n Depending on the level of their profits, the self-employed may currently be liable for two Classes of National Insurance contribution \u2013 Class 2 and Class 4.<\/p>\n Class 2 is payable at a flat weekly rate for each week of self-employment in the tax year. For 2017\/18, the contribution rate is \u00a32.85 per week. A contribution liability only arises if profits exceed the small profits threshold, set at \u00a36,025 for 2017\/18. The contributions for the year are payable by 31 January after the end of the tax year and are payable under the self-assessment system (although they are not taken into account in working out payments on account. Payment of Class 2 contributions earns entitlement to the state pension and certain contributory benefits.<\/p>\n Class 4 contributions currently earn no pension and benefit entitlement. They are payable at the main rate of 9% on profits between the lower profits limit of \u00a38,164 and upper profits limit (UPL) of \u00a345,000 and at the additional rate of 2% on profits over the UPL of \u00a345,000 (2017\/18 rates and limits). They too are collected via self-assessment but are taken into account when working out payments on account.<\/p>\n From April 2018<\/strong><\/p>\n From 6 April 2018 (2018\/19 tax year), the self-employed will only pay Class 4 contributions. Class 2 contributions are abolished from that date and Class 4 is reformed to provide the mechanism by which the self-employed earn pension and benefit rights.<\/p>\n The reformed Class 4 looks a lot like Class 1 when assessed on an annual basis (as for directors) \u2013 but (for the time being at least), a lower rate.<\/p>\n In the Spring 2017 Budget, the Government announced plans to increase the main rate to 10% from April 2018 and again to 11% from April 2019 \u2013 only to swiftly back track. For now, this looks likely to remain at 9% come April 2018 \u2013 but it remains to be seen how long it stays there.<\/p>\n","protected":false},"excerpt":{"rendered":" Change is on the horizon \u2013 from April next year, the self-employed will only pay one Class of National Insurance rather than the two currently payable. Change is on the horizon \u2013 from April next year, the self-employed will only pay one Class of National Insurance rather than the two currently payable. Current position Depending […]<\/p>\n","protected":false},"author":7,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1,125],"tags":[106,35,54,105],"acf":[],"yoast_head":"\n\n