Budget 2015 Abolish Self-Employed Class 2 National Insurance

Budget 2015 Abolish Self-Employed Class 2 National Insurance.

In the budget speech the Chancellor confirmed that the government intends to abolish the flat rate, class 2 national insurance contributions (NOC) that are paid by the self-employed in addition to class 4 national insurance contributions that are paid based upon a percentage of profit between certain bands.

The government suggests that this will happen within the next Parliament and they will amend class 4 national insurance contributions with a new contributory benefit test.

Again we suggest this will be a simple model much like the RTI (real-time information) system that employers have to complete each month as part of their payroll run.  RTI is basically every time an employee is paid, HMRC is notified of the number of hours worked, pay and national insurance contributions due.

A revised class 4 national insurance rate for the self-employed will effectively homogenise both employees and employers and self-employed national insurance contributions and we suggest with the new digital tax account system that the government is to introduce for all, the changes to class 2 self-employed national insurance contributions will be included in this exercise.

This is likely to means that the self-employed will pay similar levels of national insurance to their employed counterparts and we hope that as a result self-employed people will also be entitled to the same benefits should they not be able to work, which is not currently the case.

Being cynics again, we believe this is a longer-term move to increase taxation and national insurance contributions on a' blanket' basis for the whole nation via the ‘back door’.

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