Calling authors earning less than £6205 a year: how will National Insurance changes affect you?

16 April 2018 Calling

Writers, illustrators and translators earning less than £6205 per year can currently make voluntary payments of £2.95 a week towards the state pension and other contributory benefits, in the form of Class 2 National Insurance Contributions (NICs).

What is changing?

The Government plans to abolish Class 2 NICs from April 2019. Self-employed workers earning below £6205 will still be able to make voluntary contributions towards their state pension – but only in the form of Class 3 NICs, which are £14.65 a week.

This adds up to £761.80 per year, a fivefold increase on the Class 2 annual contribution of £153.40. If you earn below £6,205, this will mean a minimum contribution of 12.3% of your income.

Will this affect you?

The Government claims that relatively few people will end up making this payment, as they will gain qualifying years for contributory benefits through other means, such as through additional employment or benefits. However, the Government’s own analysis suggests that 100,000 self-employed workers earning less than £6205 a year will end up making these payments of £14.65 a week (2% of a workforce of 5 million).

We are concerned that this change will disproportionately affect authors and other creators who are already struggling financially. Many have an author income below £6205, and some have no other sources of income.

The Society of Authors met with HMRC last week, and we said that we would submit further evidence of the impact these proposed changes would have on our members. If you are below state pension age and earn below £6205 per annum from your writing, and if you have no other sources of income, please get in touch with us to explain how you will be affected.

  • What are your views on the Government’s plans?
  • How will you budget for this higher amount?
  • Will you bite the bullet and pay the extra, or will this voluntary contribution represent a ‘luxury’ expense you can no longer afford?

 

You can post in the Comments section below or email us at tgallagher@societyofauthors.org by Monday 23 April. We will of course keep all examples anonymous in any correspondence with the Government.  

 

 

Comments

Bronwen Griffiths 25/04/2018 10:18:35
" I used to work part-time but now only work as a writer - earning a pittance! I am also one of those women who will have to wait an extra six years for her pension - something I did not budget for as I didn't know it was going to happen until very late in the day. And now this. It probably won't affect me too much personally as I've paid in just about enough N.I. but it's a huge hike for those on low incomes. Why is it that those of us on low incomes always seem to suffer the most? The rich gets richer, the poor get poorer. And that is borne out by statistics. The gap between higher and lower earners is increasing. It's rotten and awful."
Debbie White 24/04/2018 12:18:43
" I am one of the women who has had their pension age deferred... so such a steep increase in NICS as well is totally unacceptable. And don't mention the stress of online accounting...
Will this government listen? Not unless we make a really loud noise about it and some influential MP's and newspapers take up our cause (see the Windrush case).
There must be some Society of Authors members who have clout! Let's get them mobilised."
Helena Drysdale 23/04/2018 07:28:29
" I am appalled by the prospect of a 500% hike in a tax on the lowest paid. It seems absurd that Amazon, who sells our books, should be untaxed, while we who write them are driven into the ground."
Peter Barratt 22/04/2018 21:42:18
" I read your email about the abolition of Class 2 National Insurance Contributions at £2.95 per week and the substitution of Class 3 voluntary Contributions but at the rate of £14.65 per week on low earning authors, with more than a little concern and indeed some bewilderment.
The change will clearly cause difficulty and possibly even financial hardship for many authors. Indeed, I find the move somewhat puzzling. Napoleon Bonaparte called this country, "A nation of shopkeepers"; a badge I believe we can wear with pride. Small businesses have been the backbone upon which, over the centuries, we have built one of the greatest economies in the world. Authors sow the seeds which our creative industries can grow to make a valuable contribution to the national economy, through taxes from books themselves, television rights, film rights and related merchandise, some of which may even prove to have an international appeal. I believe it would be a serious mistake to snuff out blossoming creative talent, that could prove to be the acorns from which great oaks grow."
Jane O'Reilly 21/04/2018 20:40:52
" I am on a low income and have been for a number of years as a chronic illness has meant that self-employment has been my only option. I have paid Class 2 NICS in order to ensure that I would at least have a state pension. Paying close to £800 instead of £150 would leave me unable to afford things essential to my job, such as SoA membership, travel to conferences, a replacement laptop should mine break. I don't even come close to earning minimum wage as it is. I can only assume that this increase in NICs is a deliberate move on the part of the government to try and make it impossible for low earners to pay so that they will not have to pay our pensions later on. It also means that women of childbearing age on a low income will be denied access to maternity pay if they cannot afford the class 3 NICS. The fact that this policy will particularly impact low earning women is something that I find absolutely appalling. You've already cut our child benefit and decreased the availability of free school meals. You've cut funding for women's refuges and rape crisis centres, and now you also want to limit our access to pensions. Shame on you, Theresa May."
Diane Janes 21/04/2018 10:28:34
" The government does not seem to understand that every change in recent years has hit the same groups of people. During the past 20 years there have been various changes regarding eligibility for a state pension (not least the raising of the pensionable age from 60 to 66 - something which happened when I was already in my 50s). Every one of these changes has been detrimental to my own situation and that of many people I know. The proposals to force self employed people to undertake online accounting are yet another change which imposes extra work, stress and expense for people who earn well below the minimum wage, and now the very lowest earners are being faced with an impossible choice - find extra money or compromise your pension eligibility. Where does the government imagine someone on an income well below poverty level, is supposed to find an extra £700 a year?
All these changes will not only hurt those already in low paid self employment - they will act as a further disincentive to those considering self employment. Instead of seeing the advantages in short term money grabbing, the government ought to be looking at fostering a healthy climate which does everything to encourage people to go it alone. The self employed - particularly those in creative fields, whose work enhances the lives of hundreds of other citizens - are an asset to be treasured, not a social problem to be harassed into extinction."
M Masters 21/04/2018 08:29:38
" I am outside the scope of this, being of retirement age, but because I earned poverty-level wages for most of my working life, I've already been penalised by the system and this has followed me into retirement with a state pension of £294 per MONTH!! This change must have been suggested by someone on a good wage with a generous pension to look forward to. They certainly have no concept of what it means to have to watch every single penny. An increase of 500% in pension contributions means a corresponding loss of money for day-to-day expenses... such as food and heat. There would be plenty of money in the pot if Amazon, Starbucks et al paid tax on every book or cup of coffee sold in UK. As ever, it's a different law for the rich who have the clout to avoid taxes that the rest of us have to pay."
Claire Watts 20/04/2018 21:31:49
" This has made me investigate the status of my National Insurance payments. I will have to pay the extra but I only have a couple more years to pay so I will keep paying. I would have felt differently about it if I was younger and I’m sure it would have affected my choices about pursuing a writing career."
David Lee 20/04/2018 17:28:52
" This Government seems hell-bent on penalizing the very people it should be supporting and encouraging. When will they understand that it is the individuals and small enterprises that are the fundamental builders of the economy. "from seeds trees grow"
This is a 5 fold increase in the basic costs of being an Author. Since when has a 500% hike in cost been within the apparent maximum annual increment in costs on business?
This is an appalling measure and should be fought at every stage."
Alison Knight 20/04/2018 14:27:35
" My income from writing is well below the £6,205 threshold and any other income I have is from either freelance work or (a small amount) on PAYE from teaching at a local college. However, I believe that, at the age of 58, having worked full-time from 1978 to 2016 and paid full NIC throughout that time, I shouldn't need to pay any NIC on my current low rate of earnings. I have already paid sufficient contributions to qualify for a full state pension. Is this right?

Regarding the ruling as a whole, I think it will cause a great deal of hardship for other writers who are struggling to make ends meet. Such an increase is unreasonable, as is the reasoning that if it isn't paid these people will be denied a full pension when they reach old age. Poverty now or poverty later? Not a choice people should have to make."
Kate Evans 20/04/2018 14:26:26
" It takes years for most authors to start making a living from their work. It just does. If those become years in which we cannot afford to make NI payments, we are in danger of disappearing out of the state pension system too. No, we don't all have other jobs. I'm a graphic novelist and it's a very labour intensive profession."
Jared Cade 20/04/2018 14:12:21
" Instead of taxing the poorest of the poor, tax the high-earners instead. It's not rocket science."
Josephine Wilkinson 20/04/2018 14:10:28
" As an author on a low income, I'm afraid this is yet another luxury that I cannot afford to pay."
Martha Lea 18/04/2018 22:03:11
" I simply won’t be able to make the payments. There’s no way I can budget for that amount"
Helen Sandler 18/04/2018 11:55:19
" This is a very disturbing prospect for me. With an annual net income below £6k, I am only able to manage with the support of my partner. I am 50 and - although concerned by the rise in the state retirement age for women - I reassure myself that I will have a state pension because I have always made NI payments. The idea that I should pay five times as much seems completely unjust and is making me really worried. I simply can't afford to pay any more BECAUSE I'M ON A LOW INCOME. My income is from writing, freelance editing and underpaid freelance marketing or events work. This work was all much better paid ten years ago. Since the recession and changes in the publishing and arts world, I am underpaid by most clients. To be further penalised by the tax system for being a low earner seems a very cruel suggestion. Please urge the government to scrap these plans."
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