Class 2 NI not being Axed at April 2019

drumtochty

The government has made a low key announcement that Class 2 NI contributions will not be axed in this parliament.

Good for low earning self-employed, like tutors who do a few hours a week to keep their state pension contributions paid or early retirees that are short of a few years NI credits for their pension, less good for higher earning self-employed workers.

https://www.bbc.co.uk/news/uk-45439542

dunstonh

Seeing as the self employed have gained over £50 per week from the new state pension, I think it is only fair they continue to pay a bit more NI.

Remember that one of the old reasons they paid lower NI was that they got lower state pension entitlement. That is no longer the case.

£2.95 per week to get £50 per week in retirement is good value.

drumtochty

You appear to be in two minds whether you agree with the government on this dunstonh.

Johnnyboy11

Good for working age expats too.

marlot

dunstonh wrote: »

Seeing as the self employed have gained over £50 per week from the new state pension, I think it is only fair they continue to pay a bit more NI.....

I agree. The headlines today only looked at the issue from one perspective - and all look like they came from the same source.

bluefukurou

Excellent news for expats. I know people earning close to six figure salaries tax free (plus no end of perks) who pay a measly £150 or so annually for a full state pension. I find it amazing that a minimum wage earner has to pay triple that and that the government have allowed it to go on for so long.

Thrugelmir

Tax system requires simplification. This was an ill thought out idea. That simply increased the burden unintentionally on a lower paid sector. Blame a previous Chancellor for creating this mess by maintaining a pledge not to increase income tax rates. Instead burying future changes to NI in every budget small print.

dunstonh

drumtochty wrote: »

You appear to be in two minds whether you agree with the government on this dunstonh.

Nope. I can't see why you would think that.

However, I do think Hammond and Osborne both mishandled NI or consequences of changes that happened under their watch.

Uxb

See my reply/comment on the tax sub board Post No 4
https://forums.moneysavingexpert.com/discussion/5892253/tax-cut-plans-for-self-employed-abandoned-mse-news

bostonerimus

Johnnyboy11 wrote: »

Good for working age expats too.

Yes, expats employed overseas will be able to pay low cost Class2 NI for a bit longer and if they get the new flat rate pension of £164/week ( 8.5k/year) that's £39 a week more than they'd have got under the old basic state pension regime.

The self employed Class 2 NI rate is really ridiculously low for the benefit you can get and for the expat there's no Class 4 rate that kicks in. There's an argument for Class 2 NI if you are low waged/profit self employed, but it's stupid for expats who could be earning large amounts to get the benefit. IMHO expats should not be allowed to pay NI or at least should pay far more. I estimate that I've paid around £6000 in NI to get my 35 years of contributions, most of it at the Class 2 rate. If I had taken those contributions and got 6% annual return I'd have around £20k and to get a lifetime annuity to pay £8.k/year needs a payout rate of about 40%....and it's index linked too. The notion of retroactively reducing a benefit is troublesome, but getting full state pension for such as small NI contribution is a bizarre and unfair result.

Joey_Soap

Johnnyboy11 wrote: »

Good for working age expats too.

Sorry to be a bit thick here, but what exactly does that mean? I have been working overseas the last three years, now age 62 and intend to retire back to the UK age say 64/65. State pension age for me is 66. For the last three years I have paid no UK NIC. The forecast says I have to pay three more years NIC to get a full state pension under the new rules. It is in my interest to do so. Thanks.