The days following a budget announcement are always interesting to me. As the headlines fade it's possible to delve into the small print and find quite substantial changes that no one seems to have noticed.
The one that's caught my eye this year is the proposed change to national insurance (NI) for sole traders. In fact there are two changes coming up, one of which is definitely happening, and another which might not, but which has significant knock-ons.
Firstly, as I've written before, from April 2015 sole traders will no longer have to pay Class 2 NI separately. It will be accounted for (and paid for) through the tax return system. The bill will come at end of the year, so no monthly direct debits or six monthly cheques are required from April. The rate of Class 2 NI from April 2015 is calculated at £2.80 per week, and you can read more on gov.uk.
So far so sensible.
The second proposal, announced yesterday, is to "abolish class 2 NI". Now, we've been here before with the word "abolish". (See Gordon Brown's budget in 2007.) It seems like a good idea to abolish a tax. But national insurance is a kind of tax which brings benefits. So if you abolish a whole class of NI there is a danger you might abolish the benefits for the people who used to pay it.
At the moment Class 2 NI makes you eligible for state pension, ESA, maternity allowance and bereavement benefits. No one's suggesting that self employed people shouldn't get any of those. But how will the Department of Work and Pensions know you're eligible if Class 2 doesn't exist?
One suggestion is that Class 4 NI (already paid by sole traders through the tax return system) will be part of the eligibility test. The problem with that is that Class 4 is only paid if your profits are high enough. What about sole traders with low profits?
Or are they saying that sole traders should be eligible for these benefits from the point of registration, even when no financial contribution to NI is made?
Watch this space. And do bear in mind that this might be kicked into touch if the Tories don't get in in May.
If you're interested you can read more on this from a proper accountant here.
Connected to this is the proposal to "abolish" the tax return, which has been generally well received. At some point it will be possible for you to enter all your income and expense information on a digital portal of some sort, and pay your tax as you go along.
The date being talked about is 2020, but a version of this is going to start as soon as 2016 for some small businesses.
Plenty to keep an eye on in the coming years.
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