Prime Minister delays national insurance rise for self-employed

Prime Minister, Theresa May has opted to delay legislation to increase National Insurance contributions (NICs) for the self-employed until the autumn amid a public backlash from senior Conservative MPs, including a government minister.

The decision by Chancellor of the Exchequer, Philip Hammond, to increase Class 4 NICs on earnings over £8,060 from 9% to 11% by April 2019 has been attacked for breaching a Conservative 2015 General Election manifesto pledge not to raise NICs.

The Prime Minister spoke briefly on the topic at a European summit in Brussels, insisting that despite delays to the legislation, the NIC rise would make the UK tax system “simpler, fairer and more progressive”.

“[However], it won’t be part of the finance bill. That is always what happens with national insurance changes. Those elements will be brought forward in the autumn,” added May.

This six-month period between the Spring Budget 2017 and the autumn legislation will give the Government time to publish a new paper that sets out the case for the Class 4 NIC changes.

“People will be able to look at the Government paper when we produce it, showing all our changes and take a judgement in the round,” said May.

“Of course, the Chancellor and his ministers will be speaking to MPs, business people and others to listen to their concerns.

“This is a change that leaves lower paid self-employed workers better off.”

In addition, a report into the changing nature of the UK’s workforce will also look closely at the gig economy and the self-employed community and is due for publication in the summer.

The report's author Matthew Taylor, a previous adviser to the New Labour government under Tony Blair, is predicted to recommend enhancing employment rights and social benefits for the self-employed sector.

Former Conservative Party leader, Iain Duncan Smith believes the Class 4 NICs legislation should be reviewed at the next budget, considering areas such as the upcoming Taylor report.

“I would like to see that kept, the ball in play, because it doesn’t land until next year, so there is plenty of scope to look [at] how this actually affects them and to listen to business representatives,” said Duncan Smith.




Image: Policy Exchange

Date published 13 Mar 2017 | Last updated 13 Mar 2017