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2024/25 Tax Cuts Will Help Self-Employed Couriers To Save Some Money

Being a self-employed courier offers the advantage of flexibility, allowing individuals to manage their own schedules and potentially enjoy a better work-life balance while also having the opportunity to maximize earnings based on their efforts and efficiency.
However, being self-employed also means you are required to file annual tax returns through the Self-Assessment system, where you report your income, claim allowable expenses, and calculate the amount of Income Tax and National Insurance contributions owed to HM Revenue & Customs.

In this Autumn press conference some good news were announced, which will potentially let self employed couriers in UK to benefit from saving around £192.40 for the financial year of 2024/25.

Here’s what has been announced:

Press release: Autumn Statement 2023 – Class 2 NIC change is a simplification and saving for some, but not those on the lowest incomes

Published on 23 November 2023

In Autumn Statement, Chancellor Jeremy Hunt announced:

Class 2 National Insurance Contributions (NIC) – normally paid by self-employed individuals – would be ‘abolished’ from next April.1 However the Low Incomes Tax Reform Group (LITRG) notes that this change does not benefit the lowest-income self-employed.

Press release. a coloured image of a speakerphone, a paper press release and microphone
The changes announced by the Government produce different results depending on which ‘income band’ you are in:

Those making profits over £12,570 will be treated as still having a qualifying year2 for contributory benefits, but without paying Class 2 NIC – so they save £192.40 in 2024/25

Those making profits between £6,725 and £12,570 will not make such a saving, as they are already being treated as paying Class 2 NIC without actually having to pay it;

Those with profits under £6,725 will still have to pay Class 2 NIC voluntarily to keep up their contributions record for benefits purposes.4

Antonia Stokes, LITRG Technical Officer, said:

“The Chancellor has described the abolition of Class 2 NIC as a simplification measure for the self-employed. However, it is not an immediate abolition, because Class 2 will continue to exist for those who wish to make voluntary contributions, at least in the short term.5 The self-employed with the lowest profits (under £6,725) will not therefore see any simplification from 6 April 2024.

“That said, we can see that a full and immediate abolition of Class 2 could have meant that those earning small amounts of self-employed profits who make voluntary Class 2 contributions might alternatively have had to pay more expensive Class 3 NIC to preserve their entitlement to state benefits, including the state pension.6 So preserving Class 2 as a voluntary system, subject to consultation on wider reform, is a sensible interim step.

“The Autumn Statement document also suggests that ‘This is a progressive reform, giving lower-paid self-employed individuals a significant tax cut.

“There will be further changes to the remaining Class 2 NIC system in future,8 and we hope that any changes will be consulted on fully to ensure that the lowest income self-employed have a means of keeping their contribution record intact.”

With that being said, maybe it is a small step towards improving but it is definitely the right step so assist self-employed couriers!

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