Just a week after the 2017 Spring Budget when Chancellor, Philip Hammond announced an increase in Class 4 National Insurance Contributions for the UK’s self employed workers, he has decided that the proposed tax increase isn’t a good idea after all!
Responding to wide criticism from Tory MPs and the perceived attack on millions of self employed workers, including the ‘white van man’, Hammond has written to MPs informing them of his decision to reverse the proposed NI hike.
His letter reads;
Millions of self employed workers up and down the country will be pleased to hear that they will no longer face an increase in Class 4 NICs of up to £700, but the failed attempted tax-grab will have damaged the government.
Self employed and small business bodies were swift to condemn the proposed NI increase when it was announced in the 2017 Spring Budget, and they are quick off the mark in welcoming the Chancellor’s Class 4 NICs u-turn today, saying;
Chris Bryce, IPSE CEO
“IPSE is delighted that the Chancellor, following IPSE’s representations, decided to rethink its plans to raise NICs on the self-employed. Two-and-a-half million hard working people will sleep easier tonight.
“The decision to remain true to the Conservative manifesto pledge is most welcome and we are delighted they have considered the detrimental effect imposing a tax rise on the self-employed population would have. The self-employed add a significant deal to the UK economy and the reversal of these changes allows them to continue doing exactly that.
“After the Budget announcement, people working for themselves up and down the country made their voices heard and Government did the right thing in listening.
“Tax for the self-employed is an incredibly complex issue and any policy needs to be carefully considered. IPSE looks forward to working with the Government to discuss how to make taxation of this group fairer while protecting treasury receipts.”
Mike Cherry, FSB National Chairman
“We are delighted for our members and all the nation’s self-employed that the Chancellor has recognised the strong opposition to this measure, admitting it was against the spirit of the Tory manifesto on which his party stood, and has now decided to scrap it for the duration of this parliament.
“The army of self-employed make a massive contribution to the UK economy. 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.
“We look forward to engaging with the summer review into the benefits that the self-employed need to be able raise families, pay the bills when sick, and prepare for retirement. We need to see what other measures are brought forward to make sure they support the UK’s small business and self-employed community.”
Lucy-Rose Walker, CEO of Entrepreneurial Spark,
“We are delighted to hear that the Chancellor is no longer penalising job-creating entrepreneurs by increasing their National Insurance contributions, which we opposed last week. To truly succeed as a nation we need to reward, rather than discourage, entrepreneurship. We’d still like to see more be done regarding other policies announced during the Budget, in particular the cut to dividend tax credits, but this is certainly a step in the right direction.”