So now we have it - the planned hike in 4NIC is to be abolished.
Anyone know, does this mean that we are now going to be stuck with 2NIC after April 2018? I was rather looking forward to that going out of the window.
I think that there should now be an orchestrated uproar agains the decision to leave 4NIC untouched :)
With kind regards
Clint Westwood
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I heard about this on the 12:30 news, and just read the BBC report.
I don't see that it should affect the abolition of Class 2. The abolition was never originally linked to an increase in Class 4.
Besides, aren't HMRC abolishing it by stealth, anyway, by removing it from any SATRs that we submit that includes it?
The timing of the announcements differed, certainly suggesting a lack of linkage, even though the timing of the effects were merged.I don't see that it should affect the abolition of Class 2. The abolition was never originally linked to an increase in Class 4.
Nevertheless, in the immediate furore following the 4NIC hike in the budget, the government defended its position by highlighting the break-even point at which a taxpayer would be worse off, which break-even point I understood to take into account the 2NIC saving to the taxpayer. So in hindsight there was a definite attempt to link them.
Furthermore, were they to U-turn on the 2NIC as well, and call it a single U-turn jointly with the 4NIC, it would be hard to justify a complaint (other than that U-turns represent a shambles). And it would help make up the coffers of the (now) shortfall in 4NIC
With kind regards
Clint Westwood
Have read the small print now. Abolition of 2NIC is still going ahead.
Unless, of course, tomorrow is another week in politics.
Unless, of course, tomorrow is another week in politics
By this time next week, who'll take a wager that Philip Hammond remains Chancellor?
Politically this has been a stonker. One wonders what the situation would have been, if a credible opposition was in place? My, how we desperately need one.
Do not suppose we can get them to back pedal re the dividend allowance.
Perhaps you might, if you could drum up a public campaign of the same level as the 4NIC did. But I can't see that happening; can you?
Your problem is - can you point to an election manifesto pledge that was broken by scaling back on the dividend allowance?
Bl**dy ridiculous manifesto pledge if ever there was one.
With kind regards
Clint Westwood
It's a shame the Press don't take such an interest in MTD, I have tried on several occasions to get them to, but to no avail
If class 2 NIC remains then I hope and expect that it will still be possible to pay voluntarily to maintain contribution record.
Under the proposed abolition of Class 2 NIC I saw no reference as to how low earners could maintain contribution record after the demise of class 2.
Looks like class 2 NIC is going to be abolished judging by:
" We will continue with the abolition of Class 2 NICs from April 2018. The cost of the changes I am announcing today will be funded by measures to be announced in the Autumn Budget.”
(source:
http://www.huffingtonpost.co.uk/entry/budget-tax-national-insurance-u-tu...?)
So that raises the question about how to voluntarily pay NIC when profits are low so as to maintain contribution record.
Maybe the self employed should be put in the same position as low earning employees, ie. if profits are between £5,820 and £ 8,060 pa then get "free" NIC credits?
HMRC published this policy paper last year re voluntarily NI payments when future profits are low.
https://www.gov.uk/government/publications/abolition-of-class-2-national...
HMRC published this policy paper last year re voluntarily NI payments when future profits are low.
https://www.gov.uk/government/publications/abolition-of-class-2-national...
So that raises the question about how to voluntarily pay NIC when profits are low so as to maintain contribution record.
Maybe the self employed should be put in the same position as low earning employees, ie. if profits are between £5,820 and £ 8,060 pa then get "free" NIC credits?
How long will it be before clients operate both as self employed AND as employees of their own limited company?
For the best of both worlds that could mean: NI savings (on the first £5,965 or £8,060 of self employed profits), all bases better covered for travelling / subsistence expenses, and avoidance of minimum wage issues for those claiming working tax credit. And of course free "Class 1" NIC credits by taking between £5,965 and £8,060 in salary.
There could be further short-term savings from employment allowance (for those able to muster a second employee), and of course tax free divs could ice that cake.
When you look at the Pension entitlement page it refers to both Class 2 & 4 as qualifying (though I thought it was only 2 that bought years for pension). That will not help low earners, who would presumably have to pay higher Class 3.
Interestingly (well for me anyway) on looking at my wife's contribution record in the years after our first child was born it shows NI credits for 81 weeks in year 1 and 103 weeks in year 2. Very odd, but never mind she has a full contributions record and forecast full pension
I thought the same as you Paul in that Class 2 entitled you to a State Pension and Class 4 was effectively another type of tax and entitled you to nowt - or at least that was how it always was.
Surely when Class 2 is abolished they will have to re-write the NIC legislation to show that Class 4 then entitles you to the State Pension?
Hammond said in his letter
'Colleagues will be aware that there has been a sharp increase in self-employment over the last few years. Most commentators believe that at least part of the increase is driven by differences in tax treatment.'
But employment status is a matter of fact not choice. I'm familiar with tax motivated incorporation. Never heard of tax motivated self-employment!
Hammond said in his letter
'Colleagues will be aware that there has been a sharp increase in self-employment over the last few years. Most commentators believe that at least part of the increase is driven by differences in tax treatment.'But employment status is a matter of fact not choice. I'm familiar with tax motivated incorporation. Never heard of tax motivated self-employment!
Hammond needs to look at the gig economy, because thats where the biggest increase in self employment has come from, mostly by large employers. The worker has no choice and loses out on holiday pay etc and the Govt loses out on the difference in NI and Employers NI.
WE all know why the U-turn took place..and its not people power effecting the change of direction..