HMRC have published a response document ‘Abolishing Class 2 and reforming Class 4 National Insurance Contributions’ following an earlier consultation. 

It confirms that:

  • Class 2 NICs are to be abolished from April 2018.
  • Self-employed individuals will access contributory benefits through Class 4 NICs or Class 3 NICs.
  • A new zero-rate band for Class 4 NICs will be introduced. Class 4 NIC will be treated as having been paid on profits falling into this band.
  • Individuals with profits below the new zero-rate band, share fishermen and voluntary development workers, will be able to rely on earlier years’ contribution records for longer when claiming contributory benefits.
  • The NI credit for foster carers will be upgraded to a Class 1 credit.

The government announced in November 2017 that the abolition of Class 2 NICs will be delayed by one year to April 2019.


Finance Act 2016: Tax update and 2016/17 rolling planner

External link

HMRC consultation documents: Consultation on abolishing Class 2 National Insurance and introducing a contributory benefit test to Class 4 National Insurance for the self-employed