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Budget 2017 update -government U-turn on NI increases for self-employed

Plans to increase National Insurance rates for self-employed people – announced in the Budget last week – have been dropped. Chancellor Philip Hammond has said the government will not proceed with the increases which were criticised for breaking a 2015 manifesto pledge.

He told MPs in a Commons statement: “There will be no increases in National Insurance rates in this Parliament.”

From 6 April 2018 Class 2 contributions will still be abolished and Class 4 contributions will be reformed to include a new threshold (to be called the Small Profits Limit). Those with profits between the Small Profits Limit and Lower Profits Limit will not be liable to pay Class 4 contributions but will be treated as if they have paid Class 4 contributions for the purposes of gaining access to contributory benefits. All those with profits at or above the Class 4 Small Profits Limit will gain access to the new State Pension, contributory Employment and Support Allowance (ESA) and Bereavement Benefit.

Class 4 national insurance contributions will be paid at 9% on profits over the Lower Profits Limit.