Government scraps planned National Insurance increase for self-employed

Chancellor U-turns on proposed increase to Class 4 NICs after backlash from conservative backbenchers and the media

Chancellor of the exchequer Philip Hammond has been forced to U-turn on a proposed increase to National Insurance contributions for the self-employed, after a backlash from conservative backbenchers and the media.

Announced in last week’s Spring Budget, the proposal would have seen Class 4 NICs increase from 9% to 10% in April 2018 and to 11% in 2019, resulting in a significant cut to take home pay for some self-employed workers.

However, Hammond was accused of breaking a 2015 general election manifesto pledge not to put up National Insurance, income tax or VAT.

In a letter to The Sun, one of the proposals most vocal critics, Hammond said: “By making these changes, I hope we have shown that we are listening to people and demonstrating our determination to keep to both the letter and the spirit of our commitments.”

Doug Monro, co-founder of Adzuna, commented: “Hammond’s plan to make the UK the most attractive place to work and grow a business would initially have introduced a tax hike that would make the gap between the employed and self-employed fairer.

“Naturally, that left a sour taste in the mouths of many self-employed workers but, once plans were scrapped, it has lifted the short-lived doom and gloom. The change of heart means avoiding the risk of crushing the entrepreneurial spirit Britain proudly displays as such a hike could deterred future generations from following their dreams and owning their own businesses.”

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