Government scraps delayed NIC tax cut for self-employed

The government has scrapped its already-delayed plans to give the self-employed a National Insurance contribution (NIC) tax break, writes Tom Ellis...

The government has scrapped its already-delayed plans to give the self-employed a National Insurance contribution (NIC) tax break.

The move follows analysis from the Treasury that found around 300,000 self-employed people making less than £6,000 a year would have had to pay five times more in pension contributions than they already do.

Labour shadow Chancellor John McDonnell had called the move “another betrayal of the self-employed”.

The new bill had been set to scrap Class 2 NICs, where those who are self-employed and earning below the small profits threshold of £6,025 can pay a weekly rate of £2.85 in order to receive state pension entitlements.

Under the proposed rules, which were set to be introduced in 2019, this group would have had to pay a voluntary Class 3 NICs rate in order to gain the same entitlement, which is currently set at £14.25 – more than four times the Class 2 rate.