Many self-employed individuals will have been understandably disappointed with the announcement in the 2017 Autumn Budget of the delay in the abolition of the “stamp” for a year until April 2019. However this is possibly not as negative as you may have first thought.
The Class 2 NIC is currently £2.85 per week rising to £2.95 per week in April 2018 so at first glance it appears that the self-employed will pay an extra £153 for the one year in which the abolition is delayed, but consider what is being paid for with these contributions:
- Maternity Allowance
- Incapacity Benefit
- Employment & Support Allowance
- Widow’s Benefit
- State Pension and Bereavement Benefits.
Had the Class 2 NICs been abolished before a suitable alternative was in place, a self-employed individual would have been required to make Voluntary Class 3 NICs in order to receive these same benefits. Voluntary Class 3 NICs currently cost £14.25 per week rising to £14.65 in April 2018 so the saving for the individual amounts to £605 over the period.
It was anticipated that there would be adjustments made to the Class 4 NICs paid by the self-employed in order to ensure continued contributions towards benefits but this proposal was withdrawn following a public and media outcry after the 2017 Spring Budget leaving the government back at the drawing board with one year to come up with a suitable alternative to deliver contributory benefits to the self-employed.