Turning to the self-employed, the flat-rate class 2 contribution will be raised from £2·10 to £2·50 a week. The rate of the class 4 contribution is not being increased but the annual limits of profits between which class 4 contributions are paid are being raised from £2,250 and £7,000 to £2,650 and £8,300.
For those self-employed paying only class 2 contributions there will be annual increases of £21·20—that is 40p a week, the amount by which the flat-rate contribution is being increased. Those paying class 4 contributions up to the old upper profits limit—£7,000—will have little overall change in their annual contribution liability. For those with profits above the old upper limit the increases will be greater, reaching a maximum of £6620 for those with profits of £8,300
| 1979–80 AND PROPOSED 1980–81 CONTRIBUTIONS | ||
| (Current) 1979–80 | (Proposed) 1980–81 | |
| (Current) 1979–80 | (Proposed) 1980–81 | |
Class 1 (earnings related contributions payable on all earnings up to the upper earnings limit provided that earnings reach the lower earnings limit): | ||
| Lower earnings limit (LEL) | £19·50 a week | £23 a week |
| Upper earnings limit (UEL) | £135 a week | £165 a week |
| Employed earner's rate: | ||
| Not contracted out | 6·5 per cent. | 6·75 per cent. |
| Contracted out | 6·5 percent. to LEL | 6·75 percent. to LEL |
| 4 per cent. between LEL and UEL | 4·25 per cent. between LEL and UEL | |
| Employer's rate*: | ||
| Not contracted out | 10 per cent. | 10·2† per cent. |
| Contracted out | 10 per cent. to LEL | 10 ·2† per cent. to LEL |
| 5·5 per cent. between LEL and UEL | 5·7† per cent. between LEL and UEL | |
| Reduced rate for certain married women and widow beneficiaries | 2 per cent. | No change |
Class 2 (self-employed flat-rate) | £2·10 a week | £2·50 a week |
| Small earnings exception—where earnings are below | £1,050 a year | £1,250 a year |
Class 4 (self-employed profits-related—payable on profits between annual profits limits): | ||
| Lower limits of profits or gains | £2,250 a year | £2,650 a year |
| Upper limits of profits or gains | £7,000 a year | £8,300 a year |
| Rate | 5 per cent. | No change |
Class 3 (voluntary contributions) | £2 | £2·40 |
* Exclusive of surcharge payable under the National Insurance Surcharge Act 1976 (amended by the Finance Act 1978). | ||
| † Net of reduction in Redundancy and Maternity Pay Fund contributions from 0·2 per cent. to 0·15 percent. | ||