REFORMS to National Insurance contributions for the self-employed should be delayed by the governmen to ensure those affected understand the implications, a tax reform group has urged.
The Low Incomes Tax Reform Group (LITRG) – part of the CIoT – has expressed fears that the government’s intention to abolish Class 2 NICs will be compromised, after it changed the method for paying them last April.
Many self-employed individuals currently pay voluntary Class 2 NICs to protect their entitlement to contributory state benefits. Whilst it is proposed that some on low incomes would be protected by the availability of NI credits, others would have to pay Class 3 NICs instead, which could result in a five-fold increase in the cost to them.
Such a rise could result in no contributions being paid, potentiall leading to a future reliance on means-tested state benefits.
LITRG has urged the government to wait until the final recommendations are made by the Office of Tax Simplification (OTS) on the separate plans for closer alignment of income tax and NICs, before it decides to press ahead with any more changes.
Anthony Thomas, LITRG chairman, (pictured) said: “It is crucial that the government consider the two overlapping changes to Class 2 and the OTS alignment proposal before they make any radical change that affects millions of people.
“We are concerned that the earliest proposed start date of April 2017 for abolition of Class 2 NICs means the changes may be rushed through without adequate further consultation together with a lack of publicity and guidance for the people affected.”
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