Skip to main content
The Actuary: The magazine of the Institute and Faculty of Actuaries - return to the homepage Logo of The Actuary website
  • Search
  • Visit The Actuary Magazine on Facebook
  • Visit The Actuary Magazine on LinkedIn
  • Visit @TheActuaryMag on Twitter
Visit the website of the Institute and Faculty of Actuaries Logo of the Institute and Faculty of Actuaries

Main navigation

  • News
  • Features
    • General Features
    • Interviews
    • Students
    • Opinion
  • Topics
  • Knowledge
    • Business Skills
    • Careers
    • Events
    • Predictions by The Actuary
    • Whitepapers
    • Webinars
    • Podcasts
  • Jobs
  • IFoA
    • CEO Comment
    • IFoA News
    • People & Social News
    • President Comment
  • Archive
Quick links:
  • Home
  • The Actuary Issues
  • March 2017
03

Self-employed NIC rise dwarfed by state pension boost

Open-access content Thursday 9th March 2017 — updated 5.50pm, Wednesday 29th April 2020

Reforms to the state pension last year offer a significantly greater income to the self-employed than the amount they will loose through increased national insurance contributions (NIC) announced yesterday, according to Royal London.

2

In April 2016, self-employed people were given rights to the state earnings-related pension scheme, which offers an extra £1,890 annually to those who have made 35 years of contributions - providing a boost of £37,500 over a 20-year retirement.

However, the combined changes in NIC contributions announced in the spring budget will cost a self-employed person just £193 each year, equating to £7,720 over a 40-year working life.

Royal London director of policy, Steve Webb, said: "When assessing an appropriate level of NICs for self-employed people, it is important to look at the full picture.

"The new state pension represents a very significant boost for the self-employed which will be worth significantly more than the cost of the NICs increases that have been announced".

Those in self-employment currently pay 9% in NICs on profits between £8,060 and £43,000, while employees pay significantly more, with scrapping of the different rates expected to raise a net £145m each year by 2021-22.

However there are concerns that the benefits employees receive through paying the higher tax rate will not be provided to the self-employed, who themselves will now be paying more, with fears also being raised that the increase in NICs could threaten entrepreneurship.

The Association of Chartered Certified Accountants' head of tax, Chas Roy-Chowdhury, said: "Self-employees are subject to a lower NICs because they do not receive the same entitlements and benefits as their employed counterparts - such as holiday and sick leave."

"Before this tax is raised, the government needs to think carefully about ways to align the level of benefits, and still has time to do this, as the increase will be phased in over two years.

"In a time when we are trying to encourage innovation and create a Britain that is 'open for business', we should not be creating barriers to entrepreneurship and self-employment."


Sign up to our free newsletter here and receive a weekly roundup of news concerning the actuarial profession

This article appeared in our March 2017 issue of The Actuary.
Click here to view this issue
Filed in:
03

You might also like...

Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Latest Jobs

Senior Underwriting Risk Manager

London (Central)
£85K-£95K + Benefits
Reference
124386

Reserving Manager (Contract)

London (Central)
£1200 - £1400 per day
Reference
124385

Life Actuary - Contract - IFRS 17 Financial Impact

England, London / England, Bristol / North Yorkshire, England
£900 - £1150 per day
Reference
124384
See all jobs »
 
 

Today's top reads

 
 

Sign up to our newsletter

News, jobs and updates

Sign up

Subscribe to The Actuary

Receive the print edition straight to your door

Subscribe
Spread-iPad-slantB-june.png

Topics

  • Data Science
  • Investment
  • Risk & ERM
  • Pensions
  • Environment
  • Soft skills
  • General Insurance
  • Regulation Standards
  • Health care
  • Technology
  • Reinsurance
  • Global
  • Life insurance
​
FOLLOW US
The Actuary on LinkedIn
@TheActuaryMag on Twitter
Facebook: The Actuary Magazine
CONTACT US
The Actuary
Tel: (+44) 020 7880 6200
​

IFoA

About IFoA
Become an actuary
IFoA Events
About membership

Information

Privacy Policy
Terms & Conditions
Cookie Policy
Think Green

Get in touch

Contact us
Advertise with us
Subscribe to The Actuary Magazine
Contribute

The Actuary Jobs

Actuarial job search
Pensions jobs
General insurance jobs
Solvency II jobs

© 2022 The Actuary. The Actuary is published on behalf of the Institute and Faculty of Actuaries by Redactive Publishing Limited. All rights reserved. Reproduction of any part is not allowed without written permission.

Redactive Media Group Ltd, 71-75 Shelton Street, London WC2H 9JQ