Following his Spring Budget 2017 speech, chancellor Philip Hammond has reversed plans for a Class 4 NICs increase for the UK’s self-employed workers.
In a letter written to Conservative Party MPs, Hammond stated that there will be no increases in NICs rates in this Parliament, citing the party’s 2015 election manifesto pledge as the factor.
The Class 4 NICs increase was to be incrementally madeover the next three years, intending to close the gap in contributions between self-employed workers and the 12 per cent paid by full-time employees. The plans were set to raise Class 4 NICs from nine per cent to ten per centin April 2018, andto 11 per cent in 2019.
In the letter, Hammond confirmed the abolition of Class 2 NICs from April 2018.
Commenting on the NICs increase “stunning u-turn”, deVere Group CEO, Nigel Green, said hiking taxes on the self-employed would only serve to “punish ambition and undermine aspiration” in Britain.
“Whilst we welcome this climbdown, it does show just how out of touch this government is with Britain’s hardworking, already-squeezed and over-taxed entrepreneurs the lifeblood of the UK economy, he said.
Green added: This grinding u-turn is now a golden opportunityfor this government to go one step further and betterincentivise those self-reliant individuals who take on the responsibility, risk and burden of setting up companies and creating jobs and wealth. This is perhaps more important than ever as Britain prepares to launch divorce proceedings from the EU.”
Praseeda Nair is the editorial director of Business Advice, and its sister publication for growing businesses, Real Business. She's an impassioned advocate for women in leadership, and likes to profile business owners, advisors and experts in the field of entrepreneurship and management.
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