The National Insurance Contributions (NICs) Bill will now be introduced in 2018 with the measures it will implement taking effect one year later, from April 2019.

These measures include the abolition of Class 2 NICs, reforms to the NICs treatment of termination payments and changes to the NICs treatment of sporting testimonials.

The one-year delay has been implemented to allow government to consult with interested parties to ensure there are ‘no unintended consequences for the lowest paid’.

Class 2 NICs are being removed to simplify the system. Those with profits below the small profits threshold (£6,025) will have to pay Class 3 contributions, which are five times as much as Class 2 contributions, if they want to build up an entitlement to contributory benefits such as the state retirement pension.

The Low Incomes Tax Reform Group (LITRG) wants the government to introduce a lower rate of Class 3 NICs so that low-income self employed can continue to make affordable savings towards their pension at a rate similar to the present Class 2 NICs.

LITRG Chair Anne Fairpo said: ‘We welcome the announcement by the government that they intend to consult with organisations such as ours which have concerns relating to the impact of the abolition of Class 2 NICs on self-employed individuals with low profits. We look forward to working with the government to lessen the risk of unintended consequences.

‘The abolition of Class 2 NICs will be a significant change to how people contribute to qualify for certain benefits and the State Pension.

‘We welcome the breathing space on this matter because of our concerns that the abolition of Class 2 was being rushed through without adequate further consultation, together with a lack of publicity and guidance for the people affected.’

Report by Amy Austin