Isle of Man review to consider changes to National Insurance

The way self-employed people on the Isle of Man pay National Insurance (NI) could be changed as part of government plans to make the payments more fair.

A consultation has been launched to have NI paid on different sources of income and merge contribution rates for those workers.

The fund is used to pay for state pensions, benefits and Manx Care.

Treasury Minister Alex Allinson said those who benefit from NI "should, where appropriate, contribute".

The current scheme had changed very little since the mid-1970s and needed to be modernised to become fair and easy to understand, he added.

A government-commissioned review said there are employees on the island who own their own business and pay themselves through a structure which avoids the payment of NI but ensures they still qualify for its benefits.

The firm estimates between 1,000 and 1,250 people are working as owner-managers on the island based on data scaled back from the UK.

The Treasury proposes aligning the NI contributions these employees pay with those of a self-employed person.

Other changes include aligning definitions in the scheme so income from employment can be treated equally for both NI and income tax purposes.

Dr Allinson said the consultation would help reform the current system and "adapt it to the needs of the island in the 21st century".

Some £219m was raised in NI for the 2020/21 tax year, with £175m paid for benefits and pensions and a further £40m paid to fund Manx Care.

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