ICAS response to the abolition of Class 2 National Insurance

ICAS has responded to HMRC consultation on the abolition of Class 2 National Insurance: Introducing a benefit test into Class 4 National Insurance for the self-employed

Published:
26 February 2016

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General comments

  1. ICAS welcomes the opportunity to comment on the consultation ‘The abolition of class 2 National Insurance: Introducing a benefit test into class 4 National Insurance for the self-employed’ issued by HMRC on 11 December 2015.
  2. The proposal to end class 2 is likely to have little impact on many groups, and significant impact on some very specific groups. In this context, the decision to delay any significant changes until April 2017 is noted and welcomed.
  3. The desire to mirror, for the self-employed, the National Insurance banding currently available to employees – with a zero-rate band between the Small Profit Threshold and the Lower Profits Limit for class 4 National Insurance, is equitable.
  4. However, self-employment and employment are very different, with the former subject to significant fluctuations in taxable earnings due not only to business results, but also to tax allowances, claims and elections. This difference in nature between employment and self-employment means that similar rules may produce results which appear inequitable in some circumstances.

Topics

  • Consultations and responses
  • Tax

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