One more year of class 2 NICs

Class 2 national insurance contributions (NICs) have been extended until April 2019, to reduce the impact on self-employed workers with low profits.

They were due to be abolished this April.

Self-employed workers with low profits, or making a loss, are currently entitled to the state pension and other contributory benefits if they pay class 2 NICs. If you are eligible, you can pay class 2 NICs on a voluntary basis at just £153.40 a year.

However, from April 2019, self-employed workers with profits below the Small Profits Threshold (SPT) – around £6,000 – will have to pay voluntary class 3 NICs at a current cost of £761.80, nearly five times more.

Where profits fall between the SPT and the class 4 threshold (currently £8,424), you will not have to pay class 4 contributions, but you will be treated as if you had paid them when working out your entitlement to benefits like the state pension.