Plans to abolish Class 2 national insurance contributions (NICs) have been scrapped by the government. Class 2 NICs were due to be abolished in April 2019, but the government has now confirmed that they will not be abolished during this Parliament.
Meanwhile, as the Brexit negotiations continue, the government has released additional ‘no deal’ Brexit advisory documents, covering such areas as mobile phone roaming charges, passports, and driving in the EU after Brexit.
Government scraps its plan to abolish Class 2 national insurance contributions
The government has scrapped its plans to abolish Class 2 national insurance contributions (NICs). They were originally due to be abolished in April 2018, but the plans were delayed for a year until April 2019. The government has now announced that Class 2 NICs will not be abolished during this Parliament.
Former Chancellor George Osborne first announced the plans, stating that abolishing Class 2 NICs would benefit an estimated 3.4 million self-employed workers. Class 2 NICs are currently paid at a rate of £2.95 per week by self-employed individuals with profits of £6,205 or more per year.
In a written statement to MPs, Robert Jenrick, Exchequer Secretary to the Treasury, stated that eliminating Class 2 NICs would have introduced ‘greater complexity' to the UK tax system.
Mr Jenrick also said that a ‘significant number’ of self-employed individuals on low profits would have experienced a rise in the amount they voluntarily pay to secure access to the State Pension.
He commented: 'The government remains committed to simplifying the tax system for the self-employed, and will keep this issue under review in the context of the wider tax system and the sustainability of the public finances.'
Responding to the government’s decision to scrap the tax cut, Mike Cherry, National Chairman of the Federation of Small Businesses (FSB), said: 'The move is extremely disappointing and flies in the face of tax simplification.
'Rather than hitting more than three million self-employed people with this levy, the Treasury should have worked harder to develop more effective ways to protect around 300,000 low-earners and maintain their contributions for the State Pension.'
Government publishes additional 'no deal' Brexit advisory documents
The government has published additional technical notices, offering further guidance for businesses and individuals in the event of a 'no deal' Brexit.
Following on from the 24 technical notices that were published in August, these new notices cover areas such as mobile phone roaming charges in Europe, and contingency plans for driving licences and passports.
According to the advice, free data roaming for people using their mobile phones in another EU country will no longer be guaranteed, although most phone companies state that they will not reinstate previous charges. If operators were to reinstate the charges, the government has said that it will set a cap of £45 a month for those using data abroad.
Meanwhile, UK drivers who choose to drive in the EU may require an international driving permit, according to the documents.
Passports, too, will change, beginning with the removal of the words 'European Union', followed by the issuing of blue passports, starting from late 2019. The papers advise those travelling to the EU to ensure that they have at least six months on their passport, in the event of 'no deal'.
The latest notices also cover such areas as vehicle type-approval, data protection, the Common Travel Area arrangements, and UK airlines' rights in the event of no deal.
Speaking ahead of the release of the documents, Brexit Secretary Dominic Raab insisted that the UK would not pay the full £39 billion Brexit 'divorce bill' if the UK fails to reach an agreement with EU. He added that the UK would 'recognise our strict legal obligations' but that the amount paid would be 'significantly, substantially lower'.
Responding to the latest technical notices, the Confederation of British Industry (CBI) stated that UK firms will be 'hit with a sledgehammer in the event of no deal'. Carolyn Fairbairn, Director General of the CBI, added: 'But it is right that the government helps businesses – particularly small firms – plan for 'no deal' and the changes that will come when the UK does strike a deal.'
Further 'no deal' Brexit publications are expected to be released in the coming weeks.
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