The government announced the abolition of Class 2 NI last year.
However as is so often the case the law of unintended consequences kicked in and this week the government announced that Class 2 would not be abolished after all.
One of the consequences of this change was that people with self employed profits below £5965 (18-19 rate) would not receive a credit for that year towards their state pension. Currently a person needs 35 years of National Insurance credit to get the new flat rate state pension. https://www.gov.uk/new-state-pension/how-its-calculated
In this case a person would have to pay Class 3 National Insurance at a rate nearly 5 times the rate of Class 2! So for example if a person was starting a business and made losses in the first year they would either not get a credit towards their state pension or have to pay £761.80 (18-19 rate) in Class 3 contributions.
The U Turn has widely been reported as the reversal of a tax cut for the self employed https://www.independent.co.uk/news/uk/politics/philip-hammond-tax-cut-self-employed-scrap-conservatives-national-insurance-contributions-nic-class-a8526236.html
However for low paid Self Employed workers paying Class 2 NICs is an essential method of ensuring they get the full state pension.
