Why NI changes could spell misery for freelancers

We are disappointed at yesterday’s Budget announcement that the collection of Class 2 National Insurance (NI) contributions should be brought within the self-assessment tax system, writes Yvette Nunn, president of the Association of Taxation Technicians.

On behalf of the ATT, I urge the government to reconsider its proposals which will change a straightforward user-friendly system into one where payments will be made much later and could affect entitlement to benefits in the meantime.

‘Class 2’ NI contributions are those that are paid by the self-employed. The government has expressed concern that a number of such individuals unfairly benefit from falling within the scope of the Small Earnings Exemption.

But we are keen to ensure that taxpayers are able to pay their contributions in the easiest way possible. The current system of payment by Direct Debit achieves that, as it requires no effort on their part once set in place. Furthermore, we do not believe that any change should create the possibility of delays in the entitlement to appropriate benefits.

In our response to HMRC’s consultation document issued in July 2013, we pointed out that on the basis of the government statistics provided within the document, the majority of self-employed individuals who would be paying Class 2 contributions were not within the scope of the Small Earnings Exception which seemed to be causing the concern that resulted in yesterday’s announcement.

This majority, some 93% of the self-employed population, were obviously finding payment by the current Direct Debit system easy and relatively painless in view of the modest amounts payable in each month.

We find no justification for such a significant number of people having to endure unreasonable and unnecessary changes to what is and should remain a simple system for paying NI.


20th March 2014

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