Self-employed NICs vote delayed until autumn

“And many of which employ apprentices and are the backbone of our economy”.

He said: “The abolition of Class 2 NICs for self-employed people announced by my predecessor in 2016 and due to take effect in 2018 would further increase the gap between employment and self-employment”.

Hammond also said that the British economy is expected to grow 2 percent this year, and that public borrowing will be 16.4 billion pounds (20 billion USA dollars) lower than expected at the time of the last economic statement, in the autumn.

May and Chancellor Philip Hammond have been under intense pressure since the move to increase National Insurance contrubutions, known as NICs, was unveiled on Wednesday, breaking a Conservative Party 2015 manifesto pledge not to hike income or sales taxes. Class 4 contributions will increase from a rate of 9% to 10% on profits above £8,060, going up to 11% the following year.

However, the ISA allowance rises to £20,000 from 6 April and dividends earned within an Isa are free from tax so most investors will still be able to avoid paying.

Labour claimed the promise amounted to a “partial U-turn” on the proposals set out by Mr Hammond. The employed person typically gets paid at the end of the month.

But the announcement proved unpopular with Tory MPs, many of whom are rebelling against the idea, according to the Times. This will affect 2.5 million workers.

GDP, however, has been downgraded to 1.6% in 2018, after already being revised down in the Autumn Statement in November, and to 1.7% in 2019 and 1.9% in 2020.

The plan has been backed by the respected Institute for Fiscal Studies, which says it will remove distortions in the tax system.

The move has now been delayed until autumn, while May said Hammond would listen to concerns over the change. But with the introduction of the new state pension, these differences have been very substantially reduced…

The way we work is changing.

“Growth happens when businesses have access to the finance they need, so measures that will improve the availability of private capital would be welcome, as would rules that require money for business support to be used for investment rather than spent on office blocks and other visually impressive schemes of questionable utility”.

♦ From 6 April the existing inheritance-tax threshold of £325,000 will be joined by an additional residence nil-rate band (RNRB) of £100,000, which increases to £175,000 by the 2020/2021 tax year.

The Treasury is missing out on some tax revenue as a result.

Why don’t employers pay more?

But IPSE, the trade body for self-employed workers, told the BBC: “The reduction in dividend tax allowance, whether you work as a sole trader or through a limited company [will mean] you will be facing higher bills”.