National Insurance rises could cut income of self-employed households by 16%
- Author: Leroy Wright Mar 13, 2017,
Mar 13, 2017, 4:11
Dominic Raab, a former minister, said: "I struggle with the changes to national insurance for the self-employed".
The Chancellor's argument has received some sympathy from experts like the Institute for Fiscal Studies, which has said that "the difference in access to benefits is nowhere near enough to account for the NICs difference" and has referred to the new change as "a modest but welcome change".
Now, the OBR said UK GDP will rise 2 per cent in 2017, compared with a 1.4 per cent prediction previous year.
Following Phillip Hammond's Spring Budget, Lee Murphy, Owner at Accountancy Software Pandle commented below.
Hammond argued that this pledge had been a "broad commitment" that only covered the main national-insurance rate.
Mrs May defended the change as "fair", given that self-employed people pay considerably less NI than employees, but promised to listen to concerns raised by Tory MPs and said there would be no vote until the autumn.
"People will be able to look at the government paper when we produce it, showing all our changes and take a judgment in the round", May told journalists in Brussels on Thursday.
Raising the Class 4 NICs is meant to counter this difference employees and employers will pay when Class 2 NICs are scrapped. One in five expected their annual bill to rise by more than 40 percent, a survey from the Federation of Small Businesses said.
It was an extraordinarily thin bijou Budget with few measures, many of them very small in value, and just 68 pages in length - half last year's Budget. That is not fair to the 85% of workers who are employees. "Today they're breaking that promise".
Foreign Secretary Boris Johnson has been asked by the Chancellor to defend the Budget in the face of a Tory backlash when it is debated by MPs on Monday.
Hammond said growth in the United Kingdom economy picked up through 2016 and employment has reached a record high of 31.8 million people. This hits the gig economy where people are already insecure and facing rising prices and job uncertainty.
In a chaotic post-Budget briefing, Treasury officials insisted that the announcement did not break the manifesto pledge.
It is due to take effect from April next year.
However, locum optometrists may have to tighten their purse strings following the Budget announcements, with an increase in self-employed national insurance contributions on the horizon.
Half are director-shareholders who have incorporated themselves as companies, but the others include savers with holdings of more than £50,000 in stocks and shares outside ISA schemes.