Budget 2017: Self-employed hit by national insurance HIKE…raising £145million a year

Tory MPs were rolling in the aisles as Philip Hammond turned his Budget into something approaching a stand-up comedy routine.

“The Chancellor announced that Class 4 National Insurance payments will rise by 1% to 10% next year and a further 1% in 2019”, said Sean McCann, Chartered Financial Planner at leading rural insurer, NFU Mutual.

According to the Office for National Statistics, about 40 percent of the more than 2 million new jobs generated since the beginning of 2008 have fallen into the self-employed category. There will still be a gap between different types of worker – employees will still pay 12%.

Self-employed people now benefit from reduced national insurance payments in comparison to people employed by companies, but that is set to change under proposals announced in the Spring Budget.

Hammond, rejecting the opposition Labour Party’s calls to increase borrowing to fund further spending, said he plans to increase the amount of tax paid by people who work for themselves.

The tax-free dividend allowance is to be reduced from £5,000 to £2,000 from April 2018.

“Employed and self-employed alike use our public services in the same way, but they are not paying for them in the same way”.

For example, it used to be the case that people who paid less in national insurance would receive a lower proportion of the state pension.

That could be a considerable increase for many self-employed people. It’s these small entrepreneurs that drive the economy and often become the ones who build the SMEs and fast-growing startups we all want to see thriving.

Elsewhere Hammond promised to introduce UK VAT on telecoms for roaming charges raised outside the European Union in an attempt to align with worldwide practice and prevent avoidance of tax.

Mr Gauke told BBC Newsnight: “I think people understand the fairness point”.

Reality Check verdict: The government did promise in its manifesto not to raise National Insurance contributions, and this is an increase, so it has broken that pledge.

The funds to social care will “enable elderly patients to be discharged when they are ready, freeing up precious NHS beds, and ensuring that elderly people are receiving the care they need”, Hammond said. Her Conservative Party repeated a commitment not to raise national-insurance contributions at least four times in its 2015 general-election campaign. The Institute for Fiscal Studies recently calculated that the self-employed enjoy a £1,240 tax advantage over employees, calling the current system “costly, inefficient, and unfair.”

This undermines the Government’s own mission for the United Kingdom to be the best place to start and grow a business, and it drives up the cost of doing business.

Responding to Hammond’s announcement of a £115-million ($140-million) package to help the homeless, John Healey, Labour’s housing spokesman, acknowledged the Chancellor had “finally woken up to the fact there’s a problem”.