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Treasury U-turns on NICs cut over fairness concerns

The Treasury has shelved plans to cut national insurance contributions for the self-employed amid concerns it would be unfair on low earners.

Class 2 NICs were set to be abolished in April, but the policy was delayed for 12 months.

National insurance contributions are set aside by the Treasury to help pay for the state pension and other benefits.

Campaigners had expressed concerns over the impact of the change on the state pensions of the low-paid self-employed, particularly women.

Scrapping Class 2 NICS would mean 300,000 self-employed workers earning less than £6,000 a year would have to pay more to access the state pension.

In a statement yesterday the exchequer secretary to the Treasury Robert Jenrick said the government had listened to concerns and will not go ahead with scrapping Class 2 NICs.

He says: “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.”

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What employers should expect over the next five years

A major feature of our articles is looking into the Jelf Employee Benefits crystal ball to predict changes and trends that may influence the short and medium term shape of UK employee benefits.  By flagging such changes early we aim to provide our followers with the tools to make sensible and informed decisions on their benefits offerings.

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