UK Chancellor U-Turns On Tax Hike For Self-Employed

Tory MPs who enthusiastically lent Philip Hammond their support for his decision to break the party’s manifesto and increase National Insurance have now been left swinging in the wind after the chancellor performed a sharp u-turn on the policy.

The original plans would have increased NICs paid by the self-employed on profits between £8,060 and £43,000 from 9% to 11% in 2019, bringing them closer to the 12% paid by employees.

The move was heavily criticised for a breaking a 2015 Conservative manifesto pledge.

Philip Hammond’s future as Chancellor of the Exchequer is highly uncertain after he embarrassingly had to drop the increase in National Insurance Contributions. Mr Hammond needs to look at business and employment taxation in the round to ensure it is competitive and equitable. “The self-employed are now excluded from the private pension system unless they make their own arrangements”, he said.

While many self-employed people were justifiably angry about the threat of having to pay higher National Insurance, the move had an bad lot of support from many commentators.

It is increasingly hard to justify why the self-employed should pay much lower national insurance contributions (NICs) than those who work for others.

“The whole national insurance saga can only be described as chaotic”. We’ve consistently argued, since this measure was announced last week, that a tax-grab on the genuine self-employed – the hairdresser, electricians and plumbers – makes absolutely no sense. Credibility takes a long time to build, but can be lost in a moment.

Speculation is now mounting that he will be sacked before the next Budget in November this year.

Another WhatsApp group – the European Research Group – can claim 60 or more potential supporters and quite a few scalps to which they have some claim to have just added yet another.

He explains: “The policy has put the spotlight on the issue of NI and the rights and benefits of those working in the gig economy”.

As James reports, last week Hammond reassured Tory MPs that they could defend the NICs increase confident in the knowledge government wouldn’t u-turn.

‘There will be no increases in NICs rates in this Parliament.

The change was created to bring the 15% of workers who are not employed directly by a single employer into line with the majority of the workforce who pay tax on their payroll.