Some self-employed persons on lower earnings and freelancers will be adversely affected if HMRC goes ahead with plans to move a National Insurance contribution date.  The taxman would like to move the date from after the tax year, to the 31st January, a move that could cause financial hardship to some of those individuals.

The Low Incomes Tax Reform Group (LITRG), an independent organisation that lobbies on behalf of the low paid in respect of their taxation matters, has raised its concerns over the proposed date change with HMRC. The LITRG called the proposal “untimely” as most of the people that would be affected normally pay their NI contributions on a monthly basis to spread the cost over the year.

The payments involved are Class-2 contributions paid by the self-employed to count towards their state retirement pension. The payment date for the contributions will, if the change goes ahead, clash with income tax self-assessment liabilities.

The Chairman of LITRG, Anthony Thomas, stated: “Whilst we acknowledge that collecting the Class-2 NIC at the same time as self-assessment liabilities may reduce administration time, it must be similarly acknowledged that it is incumbent upon HMRC to take into account the needs and challenges faced by those on low incomes.”

He went on to say that by collecting this extra amount on the 31st January HMRC would increase the burden of debt of those on low incomes.  Their position under the new Universal Credit would also be adversely affected, because an extra cost would arise in January every year with no tax relief being given.

A decision is awaited from HMRC.

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