Abolition of Class 2 Delayed
Class 2 National Insurance contributions were due to be abolished with effect from 6 April 2018, with Class 4 contributions being reformed from the same date to provide the mechanism by which the self-employed can build up their contributions record and earn entitlement to the state pension and to certain contributory benefits.
However, the start date of the reforms has been delayed and they will now be implemented from 6 April 2019 – one year later than originally planned. This will mean that the self-employed will continue to pay both Class 2 and Class 4 contributions for 2018/19, as for now.
Class 2 contributions will now be abolished from 6 April 2019. From that date, Class 4 contributions will earn pension and benefit entitlement. A new small profits limit will apply for Class 4 purposes, with Class 4 contributions being charged at a notional zero rate where profits fall between the new small profits limit (set at 52 times the lower earnings limit applying for Class 1 purposes) and the lower profits limit. Self-employed earners whose profits fall in this band will be able to build up their contribution record for zero contribution cost.
Please contact us on 01275 852 255 for personal advice on your own affairs or should you wish to discuss any of the above in more detail.