Class 2 NI contributions to stay - for now

THE UK GOVERNMENT announced in early September that it was scrapping, or at least delaying, plans to abolish Class 2 national insurance contributions.

HMRC confirmed to the Society of Authors that the self-employed who earn less than £6205 per year in self-employment can continue with the current Class 2 regime in which they make voluntary payments of £2.95 a week, which count towards pension contributions.

The spectre of freelances having to pay Class 3 contributions instead - £14.65 a week, amounting to 12 per cent of the income of some of the lowest-paid self-employed people - has receded.

Freelances still need to actively contact the HMRC to make these voluntary Class 2 payments, and to consider making backdated payments for any holes in their NI contribution history (there are limits on how far back these can go, so seek advice on this). Some reports suggest the abolition of Class 2s has only been postponed until April 2019, so fill those gaps in your Class 2 contributions history while you still can. The National Insurance system remains unreformed as a result of the announcement, which is probably bad news in the long term for millions of low-earning self-employed folk.

See our guide from March this year on keeping your Class 2s up to date for your pension contributions; you can ignore its April 2018 deadline in the light of Class 2s remaining for now. It's at www.londonfreelance.org/fl/1803ni.html.