Key announcements in annual United Kingdom budget

Hammond said that lower national insurance contributions from self-employed workers is forecast to cost public finances £5 billion this year alone.

Some are already calling for a review merely 24 hours after the measure was unveiled.

An employee earning 32,000 pounds a year will pay a total of 6,170 pounds towards the U.K.’s state benefits, known as National Insurance, Hammond told United Kingdom lawmakers March 8. The personal allowance will also rise again, meaning people will not pay tax until they earn more than £11,500, a move he said meant 29 million would be better off.

The IFS said the chancellor’s 2% increase in NICs for the self employed closed a small fraction of the gap between employees and the self employed.

David Cameron also said in speech in December 2015: “We said in our manifesto we would not raise VAT, National Insurance or income tax for the next five years”.

Mr Hammond left income tax rates unchanged but announced that the self-employed would pay a higher rate of national insurance, a move he claimed would make the tax system fairer.

“Phillip Hammond wants to level the playing field between employees, self-employed and companies and we therefore expect there to be more significant changes in the future”.

Improvements in tax collection would yield an extra 820 million pounds, said Hammond, including a tax on roaming telecom charges outside the European Union (EU) and, from July, a new financial penalty from professionals who use tax avoidance arrangements which are later unravelled by the government tax inspectors.

Chris Sanger, head of tax, EY, said those who have “just more than £50,000 in shares will now be caught up by a tax rise that is ostensibly targeted at owner managers”. “But. our job is to do what needs to be done to get Britain match fit for its future”. Other Conservatives worry the measure may alienate core Tory voters.

“Labour will oppose this unfair £2 billion sole traders tax on the self-employed low and middle earners”.

Former Shadow Chancellor Chris Leslie tweeted on Thursday morning that the House of Commons Library had told him the Government would be forced to introduce National Insurance changes through “separate primary legislation” to the Budget.

Meanwhile under the old state pension system, the National Insurance contributions of the self-employed built up rights to a basic state pension but not to the state earnings-related pension scheme. “I’m sure many voted on that basis and they feel betrayed”.