In the recent budget announcement, Chancellor George Osborne announced his plans to abolish class 2 national insurance contributions. The 5 million strong army of self employed in the UK will no doubt welcome this news.
Class 2 national insurance costs small business owners £2.75 per week saving them £143 per year. The big celebration is in the decrease in bureaucracy and red tape that this announcement brings with it.
There have been concerns raised regarding the link between class 2 national insurance and some benefits though. Robin Williamson, technical director of the Low Incomes Tax Reform Group (LITRG) said: ‘Abolishing Class 2 NICs will be a welcome simplification, particularly to those for whom the requirement to register for Class 2 while also paying Class 4 has long been a source of confusion and a bureaucratic trap. But it is essential that nobody’s contributory benefits entitlement is eroded by the change.’