The Chancellor has just scrapped a planned £150 per year cut in taxes for the self employed. It was originally announced in the 2015 UK Budget and was set to be introduced from April 2018. It was then delayed until April 2019 and now it has been scrapped altogether.
The plan was to cut the Class 2 weekly contribution toward national insurance by self employed people, currently £2.95 a week (or £153 a year) if profits exceed £6,205 per year.
Around one million people with profits below the £6,205 level could voluntarily pay the contribution to retain rights to the state pension and similar state benefits - and the delay was initially due to the Chancellor attempting to find an alternative for these people so they were not forced to use the Class 3 national insurance contribution at a cost to each of them of over £500 per year.
A rise in Class 4 self employed national insurance was mooted as an option to retain benefit/pension rights but this was vetoed before the last Autumn Budget in 2017.
Yesterday it was announced that the plan to cut Class 2 NIC's would be scrapped until at least 2020. This will strike a blow to the over three million people who are obliged to pay them on top of Class 4 NIC's.
It has though provided a saving to the Treasury from a reduction in income of near £400 million per year.