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NIC changes for the self-employed

30 November 2023

Chancellor's Autumn changes for self-employed: Removes Class 2 NIC for profits over £12,570, and cuts Class 4 NIC by 1% for earnings £12,570 to £50,270 from April 2024, benefiting two million self-employed individuals.

In the recent Autumn Statement, the Chancellor announced two important changes to National Insurance contributions (NIC) for the self-employed.

The first change concerns the removal of Class 2 NICs for the self-employed. Meaning that self-employed people with profits above £12,570 won’t be required to pay Class 2 NICs from 6 April 2024. Class 2 NICs are currently paid by the self-employed in order to qualify for benefits such as the state pension.

This change effectively abolishes Class 2 NICs for some two million self-employed people. The self-employed benefitting from this change will continue to receive access to contributory benefits including the State Pension.

Those currently paying Class 2 NICs voluntarily will still be able to do so at the same rate. This includes those with profits under £6,725 (Small Profits Threshold) and others who pay Class 2 NICs voluntarily to access contributory benefits including the State Pension. The weekly rate for making voluntary Class 2 NICs will be frozen at the current rate of £3.45 for 2024-25, rather than rising by CPI to £3.70. The Small Profits Threshold will also remain frozen at £6,725 for 2024-25.

Secondly, the Chancellor announced that the main rate of self-employed National Insurance, Class 4 NIC, on all earnings between £12,570 and £50,270 will be cut by 1%, from 9% to 8% from April 2024. This is worth £350 for the average self-employed person on £28,200.

Source: HM Revenue & Customs Tue, 28 Nov 2023 00:00:00 +0100

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