Autumn Budget 2017: National Insurance changes

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Sarah Bradford analyses the changes announced to national insurance for employers, employees, the self-employed and for termination payments.   

Employers and employees

National Insurance rates and threshold have been set for 2018/19. The lower earnings limit for Class 1 National Insurance purposes will increase to £116 per week, the primary and secondary thresholds to £162 per week and the upper earnings limit, upper secondary threshold and apprentice upper secondary threshold to £892 per week.

The main primary rate of class 1 remains at 12%, the additional rate is set at 2% and the secondary rate at 13.8%. Class 1A and Class 1B NIC are also unchanged at 13.8%. The Employment Allowance remains at £3,000.

Self-employed

As announced on 2 November 2017, the National Insurance Contributions Bill has been delayed and will be introduced to Parliament in 2018. As a result, the reforms to the National Insurance regime for the self-employed, which involve the abolition of Class 2 and the reform of Class 4 so as to provide the mechanism by which the self-employed build up entitlement to the state pension and certain contributory benefits, are delayed by one year until April 2019.

Consequently, for 2018/19 the self-employed will pay Class 2 contributions at £2.95 per week on profits in excess of the small profits threshold of £6,205. They will also pay Class 4 contributions at 9% on profits between £8,424 and £46,350, and at 2% on profits in excess of £46,350. Self-employed earners with profits below £6,205 can pay Class 2 contributions voluntarily in order to maintain their contributions record.

The rate of Class 3 (voluntary) contributions is increased to £14.65 per week from 6 April 2018.

Termination payments

The delay to the National Insurance Contributions Bill also means that the extension of Class 1A National Insurance to termination payments not taxed as earnings in excess of £30,000 will be delayed to April 2019. In addition, the imposition of PAYE and NIC on income from non-contractual, non-customary sporting testimonials in excess of £100,000 will take effect from 6 April 2019 rather than 6 April 2018.

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