Self-employed workers will save £350 million a year in national insurance contributions from 2018, the Chancellor announced in his budget statement.
Under the current rules, self-employed workers have to pay £2.80 per week in Class 2 National Insurance contributions if they earn more than £5,965 profit a year, but these will be scrapped from April 2018.
The changes do not affect class 4 national insurance contibutions, which are paid by self employed workers who make more than £8,060 a year. These are charged at 9% on profits between £8,060 and £42,385, and 2% on any profits above £42,385.
“To help the self-employed I’m going to fulfil the manifesto commitment we made, and from 2018 abolish Class 2 National Insurance Contributions altogether,” said Chancellor George Osborne.
“That’s a simpler tax system and a tax cut of over £130 for each of Britain’s 3 million strong army of the self-employed.”