Exclusive: Budget change on NI
Chancellor poised to hit self-employed benefits
The Treasury has become increasingly wise to the growth in the self-employed sector and the revenue being lost as individuals move out of paid employment and take advantage of the lower national insurance liabilities.
It is believed he will make moves to equalise NI payments to help meet soaring social care costs.
In his Budget this week the Chancellor could also taunt the Scottish government with a further rise in the income tax threshold for higher earners, following the SNP administration’s decision not to raise it in Scotland in line with England and Wales.
Tax professionals and small firms’ bodies are hoping there will be a delay in the implementation of the Making Tax Digital programme which commits even micro-businesses with turnover in excess of £10,000 to producing quarterly tax returns.
Two big factors are likely to dominate the last March Budget before the move to annual November statements: Brexit and business rates. While any announcement on the latter will only affect England, his comments on the EU talks will be keenly scrutinised for clues to the latest government thinking.
One body, the Association of Chartered Certified Accountant, wants him to re-align the assumptions of the Comprehensive Spending Review with the impact of the Brexit timetable.
It says decisions based on a short-term electoral cycle will exacerbate the likely uncertainty caused by the UK’s exit from the EU.
There are expectations that Mr Hammond will outline tax policies aimed at maintaining Britain’s competitiveness post-Brexit.
He may also have something to say about trade deals for key industries, with pressure mounting for ‘Nissan-style’ deals to be extended to other sectors.
Few fireworks are expected in Wednesday’s announcement, although Mr Hammond will have the opportunity for some tinkering with public services thanks to a better than expected improvement in the public finances.
Economic performance has proved resilient against forecasts of Brexit caution, helping put more people into tax-paying jobs, and households continue to spend in defiance of inflationary pressure on prices. The housing market is buoyant and even oil prices have stabilised at a rate that has encouraged some tentative activity.
The improved outlook has encouraged the Office for Budget Responsibility and the Bank of England to revise their forecasts upwards.