Go Back  British Expats > Living & Moving Abroad > Middle East
Reload this Page >

Another U-turn on Class 2 NICs

Another U-turn on Class 2 NICs

Old Sep 6th 2018, 5:14 pm
  #1  
Onwards and Upwards!
Thread Starter
 
Johnnyboy11's Avatar
 
Joined: Sep 2010
Posts: 739
Johnnyboy11 has a reputation beyond reputeJohnnyboy11 has a reputation beyond reputeJohnnyboy11 has a reputation beyond reputeJohnnyboy11 has a reputation beyond reputeJohnnyboy11 has a reputation beyond reputeJohnnyboy11 has a reputation beyond reputeJohnnyboy11 has a reputation beyond reputeJohnnyboy11 has a reputation beyond reputeJohnnyboy11 has a reputation beyond reputeJohnnyboy11 has a reputation beyond reputeJohnnyboy11 has a reputation beyond repute
Default Another U-turn on Class 2 NICs

Good news for expats https://www.telegraph.co.uk/politics...x-cut-leaving/
Johnnyboy11 is offline  
Old Sep 7th 2018, 12:19 pm
  #2  
BE Enthusiast
 
Joined: Oct 2010
Location: Abu Dhabi since Jan 2011
Posts: 542
archie159 is a splendid one to beholdarchie159 is a splendid one to beholdarchie159 is a splendid one to beholdarchie159 is a splendid one to beholdarchie159 is a splendid one to beholdarchie159 is a splendid one to beholdarchie159 is a splendid one to beholdarchie159 is a splendid one to beholdarchie159 is a splendid one to beholdarchie159 is a splendid one to beholdarchie159 is a splendid one to behold
Default Re: Another U-turn on Class 2 NICs

Originally Posted by Johnnyboy11 View Post
Any chance of copying/pasting the article text please (assuming it is not too long)? For some reason, I can't log in to the telegraph at the moment, and it won't show more than the first few sentences of the article without logging in! Thanks.
archie159 is offline  
Old Sep 7th 2018, 6:34 pm
  #3  
Onwards and Upwards!
Thread Starter
 
Johnnyboy11's Avatar
 
Joined: Sep 2010
Posts: 739
Johnnyboy11 has a reputation beyond reputeJohnnyboy11 has a reputation beyond reputeJohnnyboy11 has a reputation beyond reputeJohnnyboy11 has a reputation beyond reputeJohnnyboy11 has a reputation beyond reputeJohnnyboy11 has a reputation beyond reputeJohnnyboy11 has a reputation beyond reputeJohnnyboy11 has a reputation beyond reputeJohnnyboy11 has a reputation beyond reputeJohnnyboy11 has a reputation beyond reputeJohnnyboy11 has a reputation beyond repute
Default Re: Another U-turn on Class 2 NICs

'Stealth tax' for self-employed: Philip Hammond U-turns on tax cut, leaving 3.4 million worse off

Save
393
Philip Hammond
Philip Hammond Credit: Simon Dawson/ REUTERS

Anna Mikhailova, Political Correspondent

6 September 2018 • 5:17pm

The Chancellor has decided to scrap a tax break for 3.4million self-employed people, in a move that has been branded a "stealth tax".

Philip Hammond has announced he is going back on the Government’s pledge to abolish Class 2 National Insurance contributions (NICs), in a move which will raise an extra £435 million a year for the NHS.

The change will scrap a tax cut of £134 a year on average for millions of self-employed.

Class 2 NICs apply to self-employed people with profits of between £6,205 and £8,424 a year. George Osborne announced he would be abolishing them in the 2015 Budget. The change was meant to be implemented this year, but Mr Hammond delayed it until April 2019.

On Thursday, he quietly announced scrapping the measure through a written ministerial statement.

The Chancellor faced a fierce backlash when he tried to raise the rates for Class 4 NICs, which apply to self-employed people with profits over £8,424, in 2017. He was accused of breaking Tory manifesto pledges and eventually ditched the plan.

However, cancelling the expected tax cut has been seen as another attack on the self-employed.

Sam Dumitriu, head of research at the Adam Smith Institute, said: "This is a stealth tax rise.

"Philip Hammond didn't win the argument in Parliament on raising Class 4 NICs. As a result, he is going back on the scrapping Class 2 as a backup."

John Redwood, the Conservative MP, said: "This is a big let down for Conservative voters, which will be extremely unpopular.

"The Government should get behind the self-employed and enterprise."
George Osborne promised to scrap Class 2 Nics
George Osborne promised to scrap Class 2 Nics Credit: Heathcliff O'Malley for the Daily Telegraph

John McDonnell the shadow Chancellor, said: “This is yet another betrayal of the self-employed.

“These people are the engine of the economy and have been let down again, while giant corporations have seen their tax bills slashed. Few will ever trust Philip Hammond or the Tories again.”

The written statement made by the Treasury said: "The Government is announcing today that it will not proceed with the abolition of Class 2 National Insurance contributions (NICs) during this parliament.

The Federation of Small Businesses said the move "raises serious questions once again about the Government's commitment to supporting the self-employed".

"This change was originally intended to simplify the tax system for the self-employed. We delayed the implementation of this policy in November to consider concerns relating to the impact on self-employed individuals with low profits. We have since engaged with interested parties to explore the issue, and further options for addressing any unintended consequences."

About 300,000 lower-income people do not have to pay national insurance but volunteer to, in order to qualify for the state pension. Critics of abolishing Class 2 NICs said the move would have forced those people to pay a higher rate if they wished to receive the state pension.

The Treasury's statement said: "A significant number of self-employed individuals on the lowest profits would have seen the voluntary payment they make to maintain access to the State Pension rise substantially. Having listened to those likely to be affected by this change we have concluded that it would not be right to proceed during this parliament, given the negative impacts it could have on some of the lowest earning in our society.

"Furthermore, it has become clear that, to the extent that the Government could address these concerns, the options identified introduce greater complexity to the tax system, undermining the original objective of the policy."

John O'Connell, chief executive of the TaxPayers' Alliance said: “Millions of self-employed people in Britain, who were promised lower and simpler taxes next year, will be extremely disappointed by this announcement.

"High taxes on the self employed discourages entrepreneurship and risk taking. If the Government wants to make contributions more equivalent between the employed and self employed, then they should instead give those on salaries a tax cut.”
Johnnyboy11 is offline  
Old Sep 7th 2018, 8:53 pm
  #4  
Lost in BE Cyberspace
 
Joined: Nov 2012
Posts: 7,693
scot47 has a reputation beyond reputescot47 has a reputation beyond reputescot47 has a reputation beyond reputescot47 has a reputation beyond reputescot47 has a reputation beyond reputescot47 has a reputation beyond reputescot47 has a reputation beyond reputescot47 has a reputation beyond reputescot47 has a reputation beyond reputescot47 has a reputation beyond reputescot47 has a reputation beyond repute
Default Re: Another U-turn on Class 2 NICs

It means that many pf those living outside the UK still have the option to declare themselves as "self-employed" and pay a very small contribution annually to ensure a full State Retirement Pension.
scot47 is offline  
Old Sep 8th 2018, 3:15 am
  #5  
Forum Regular
 
Joined: Sep 2018
Posts: 31
Me 2.0 is an unknown quantity at this point
Default Re: Another U-turn on Class 2 NICs

I trust we’re all making our voluntary contributions.
Me 2.0 is offline  
Old Sep 8th 2018, 4:47 pm
  #6  
BE Enthusiast
 
Joined: Mar 2013
Location: where I currently am
Posts: 446
sicklyman has a reputation beyond reputesicklyman has a reputation beyond reputesicklyman has a reputation beyond reputesicklyman has a reputation beyond reputesicklyman has a reputation beyond reputesicklyman has a reputation beyond reputesicklyman has a reputation beyond reputesicklyman has a reputation beyond reputesicklyman has a reputation beyond reputesicklyman has a reputation beyond reputesicklyman has a reputation beyond repute
Default Re: Another U-turn on Class 2 NICs

I was under the impression that to pay voluntary class 2 you had to have declared yourself self-employed prior to leaving.

Been paying Class 2 for decades so very glad that my last year overseas will see it continue for expats.
sicklyman is offline  
Old Sep 9th 2018, 7:58 am
  #7  
Forum Regular
 
Joined: Apr 2015
Posts: 151
Taz786 is an unknown quantity at this point
Default Re: Another U-turn on Class 2 NICs

I've been out of the UK since 2011 and haven't paid any National Insurance since.

To back-track, would I qualify for Class 3 voluntary payments? I haven't informed any government agencies that I am working abroad. Will the above affect and will they ask questions?
Taz786 is online now  
Old Sep 9th 2018, 8:44 am
  #8  
Millhouse is not a meme
 
Millhouse's Avatar
 
Joined: Aug 2009
Location: Disneyland, Dubai
Posts: 14,388
Millhouse has a reputation beyond reputeMillhouse has a reputation beyond reputeMillhouse has a reputation beyond reputeMillhouse has a reputation beyond reputeMillhouse has a reputation beyond reputeMillhouse has a reputation beyond reputeMillhouse has a reputation beyond reputeMillhouse has a reputation beyond reputeMillhouse has a reputation beyond reputeMillhouse has a reputation beyond reputeMillhouse has a reputation beyond repute
Default Re: Another U-turn on Class 2 NICs

Originally Posted by Taz786 View Post
I've been out of the UK since 2011 and haven't paid any National Insurance since.

To back-track, would I qualify for Class 3 voluntary payments? I haven't informed any government agencies that I am working abroad. Will the above affect and will they ask questions?
you can probably pay class2

I left in 2008 and paid about 8 years of Class 2 earlier this year. It's not an easy process though.
Millhouse is offline  
Old Sep 9th 2018, 9:04 am
  #9  
Forum Regular
 
Joined: Apr 2015
Posts: 151
Taz786 is an unknown quantity at this point
Default Re: Another U-turn on Class 2 NICs

Originally Posted by Millhouse View Post
you can probably pay class2

I left in 2008 and paid about 8 years of Class 2 earlier this year. It's not an easy process though.
I thought Class 2 was self employment. I guess I will do abit more research and make payments for the past 7 years. Thanks
Taz786 is online now  
Old Sep 9th 2018, 9:31 am
  #10  
BE Enthusiast
 
Joined: Mar 2013
Location: where I currently am
Posts: 446
sicklyman has a reputation beyond reputesicklyman has a reputation beyond reputesicklyman has a reputation beyond reputesicklyman has a reputation beyond reputesicklyman has a reputation beyond reputesicklyman has a reputation beyond reputesicklyman has a reputation beyond reputesicklyman has a reputation beyond reputesicklyman has a reputation beyond reputesicklyman has a reputation beyond reputesicklyman has a reputation beyond repute
Default Re: Another U-turn on Class 2 NICs

Class 2 is for self-employment and, AFAIK, if you are self-employed and paying them before you leave the UK, you can voluntarily continue to pay them overseas. At least this was the situation when I last left the UK in 2013. Things may have changed.

If you're already overseas, then I believe the more expensive Class 3 voluntary is what you'll only be allowed to pay. Millhouse's experience suggests I'm wrong on that. I also thought that there was a 6 year backdate limit on missed NI payments. Am I wrong again?
sicklyman is offline  
Old Sep 9th 2018, 9:43 am
  #11  
Millhouse is not a meme
 
Millhouse's Avatar
 
Joined: Aug 2009
Location: Disneyland, Dubai
Posts: 14,388
Millhouse has a reputation beyond reputeMillhouse has a reputation beyond reputeMillhouse has a reputation beyond reputeMillhouse has a reputation beyond reputeMillhouse has a reputation beyond reputeMillhouse has a reputation beyond reputeMillhouse has a reputation beyond reputeMillhouse has a reputation beyond reputeMillhouse has a reputation beyond reputeMillhouse has a reputation beyond reputeMillhouse has a reputation beyond repute
Default Re: Another U-turn on Class 2 NICs

Originally Posted by sicklyman View Post
Class 2 is for self-employment and, AFAIK, if you are self-employed and paying them before you leave the UK, you can voluntarily continue to pay them overseas. At least this was the situation when I last left the UK in 2013. Things may have changed.

If you're already overseas, then I believe the more expensive Class 3 voluntary is what you'll only be allowed to pay. Millhouse's experience suggests I'm wrong on that. I also thought that there was a 6 year backdate limit on missed NI payments. Am I wrong again?
Just checked... I paid 9 years Class 2 at an average 150quid a year. You have to apply and get permission to do so and meet certain criteria.
Millhouse is offline  
Old Sep 9th 2018, 9:56 am
  #12  
Forum Regular
 
Joined: Apr 2015
Posts: 151
Taz786 is an unknown quantity at this point
Default Re: Another U-turn on Class 2 NICs

@ Millhouse - Did you apply yourself or use a tax adviser to assist?
Taz786 is online now  
Old Sep 9th 2018, 10:07 am
  #13  
Onwards and Upwards!
Thread Starter
 
Johnnyboy11's Avatar
 
Joined: Sep 2010
Posts: 739
Johnnyboy11 has a reputation beyond reputeJohnnyboy11 has a reputation beyond reputeJohnnyboy11 has a reputation beyond reputeJohnnyboy11 has a reputation beyond reputeJohnnyboy11 has a reputation beyond reputeJohnnyboy11 has a reputation beyond reputeJohnnyboy11 has a reputation beyond reputeJohnnyboy11 has a reputation beyond reputeJohnnyboy11 has a reputation beyond reputeJohnnyboy11 has a reputation beyond reputeJohnnyboy11 has a reputation beyond repute
Default Re: Another U-turn on Class 2 NICs

Originally Posted by sicklyman View Post
Class 2 is for self-employment and, AFAIK, if you are self-employed and paying them before you leave the UK, you can voluntarily continue to pay them overseas. At least this was the situation when I last left the UK in 2013. Things may have changed.

If you're already overseas, then I believe the more expensive Class 3 voluntary is what you'll only be allowed to pay. Millhouse's experience suggests I'm wrong on that. I also thought that there was a 6 year backdate limit on missed NI payments. Am I wrong again?
Try for the cheaper Class 2 NICs. Send HMRC a letter with the form at the back of NI 38, asking to back pay Class 2 NICs. They'll respond with a table explaining what you need to pay for each tax year, which you can pay by cheque. The form also sets up a Direct Debit for you going forward. Watch how you complete the form, one of the main eligibility criteria for Class 2 NICs is that you had no significant break between working in the UK and working overseas (no more than a week, I think). I back paid 6 years for about £730 total.

Worth remembering that National Insurance is mandatory if you are employed again back in the UK, through PAYE, even if you have already reached the required 35 years for the full State Pension. So worth checking you current NI status and State Pension entitlement online. Also worth checking online if any of your current NI years are 'Contracted-Out', as these get you a reduced State Pension, so you might need to get more than 35 years anywway to get the full State Pension.

Class 2 NICs are an incredibly good investment. The State Pension of £8.5k a year would probably cost around £300k to buy as an annuity on the market.
Johnnyboy11 is offline  
Old Sep 9th 2018, 10:32 am
  #14  
Millhouse is not a meme
 
Millhouse's Avatar
 
Joined: Aug 2009
Location: Disneyland, Dubai
Posts: 14,388
Millhouse has a reputation beyond reputeMillhouse has a reputation beyond reputeMillhouse has a reputation beyond reputeMillhouse has a reputation beyond reputeMillhouse has a reputation beyond reputeMillhouse has a reputation beyond reputeMillhouse has a reputation beyond reputeMillhouse has a reputation beyond reputeMillhouse has a reputation beyond reputeMillhouse has a reputation beyond reputeMillhouse has a reputation beyond repute
Default Re: Another U-turn on Class 2 NICs

Originally Posted by Taz786 View Post
@ Millhouse - Did you apply yourself or use a tax adviser to assist?
myself.
Millhouse is offline  
Old Sep 10th 2018, 9:02 am
  #15  
BE Enthusiast
 
Joined: Mar 2013
Location: where I currently am
Posts: 446
sicklyman has a reputation beyond reputesicklyman has a reputation beyond reputesicklyman has a reputation beyond reputesicklyman has a reputation beyond reputesicklyman has a reputation beyond reputesicklyman has a reputation beyond reputesicklyman has a reputation beyond reputesicklyman has a reputation beyond reputesicklyman has a reputation beyond reputesicklyman has a reputation beyond reputesicklyman has a reputation beyond repute
Default Re: Another U-turn on Class 2 NICs

I highly recommend getting a pension forecast online for free from

https://www.gov.uk/check-state-pension

used to be you'd have to write to them and wait a couple of months. Now you can see the plain truth instantly.
sicklyman is offline  

Contact Us Archive Advertising Cookie Policy Privacy Statement Terms of Service

Copyright © 2018 MH Sub I, LLC dba Internet Brands. All rights reserved. Use of this site indicates your consent to the Terms of Use.