The government’s decision not to move ahead with its planned tax increases for the self-employed has been welcomed by the Association of Independent Professionals and the Self Employed.
Having sharply criticised the Budget announcement that Class 4 National Insurance contributions were to be increased for self-employed people, the organisation said the U-turn will mean this group “will sleep easier tonight”.
Chancellor Philip Hammond had intended to increase contributions for self-employed workers from nine per cent to ten per cent from April 2017, with a further increase to 11 per cent in 2019, arguing that the gap between benefits available to the self-employed and other workers has narrowed to the point that tax rules need to be reexamined.
However, the decision to raise National Insurance contributions was considered to be contrary to a pledge made by the Conservative Party in its 2015 election manifesto, leading to significant pushback from cross-party MPs and the general public. Based on this backlash, Mr Hammond has now promised that National Insurance rates will not rise during the current parliament.
Chris Bryce, chief executive officer of IPSE, praised the government for doing the “right thing” by listening to public opinion on this key matter. He also acknowledged the complexity of the factors involved in taxing the self-employed, saying IPSE will seek to work with the government to find a way of making the system fairer while also protecting treasury receipts.
Mr Bryce said: “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.”