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.