Another U-Turn by Hammond
Chancellor under attack for ditching tax cut pledge
Philip Hammond: reversing policy pledge
A plan to cut national insurance payments for the self-employed has been scrapped by Chancellor Philip Hammond.
The Government has announced that self-employed people will continue paying Class II National Insurance Contributions (NICs), despite promising in April that the tax would be abolished.
The reversal will net the Treasury more than £350 million annually in the three years to 2021.
John McDonnell, Shadow Chancellor, said the move was “yet another betrayal of the self-employed.
“These people are the engine of the economy and have been let down again, while giant corporations have seen their tax bills slashed. Few will ever trust Philip Hammond or the Tories again.”
Federation of Small Businesses (FSB) national chairman, Mike Cherry, said: “The self-employed community has been let down today, missing out on a promise to reduce their tax burden. This raises serious questions once again about the Government’s commitment to supporting the self-employed.
“The move is extremely disappointing and flies in the face of tax simplification.”
He said Class II NICs is a regressive levy that “indiscriminately” hits sole traders and makes life even tougher for those who are hard-up. There is no tapering or means testing.
“As things stand, you can be earning below the living wage and still paying two sets of NICs as a self-employed person. All the while you’re wrestling with a Universal Credit system that’s trying to strong-arm you into full-time employment.
“Rather than hitting more than 3 million self-employed people with this levy, the Treasury should have worked harder to develop more effective ways to protect around 300,000 low-earners and maintain their contributions for the state pension.
“The self-employed were promised in no uncertain terms that this niggling tax would end but have been left high and dry: little thanks for the £270 billion they contribute to the economy each year.
“Our sole traders take risks to provide the flexibility and on-demand expertise that keep our economy growing. It’s about time that contribution was properly recognised.
“We are speaking urgently with the Treasury to discuss new measures that can be put in place to support the self-employed, such as around skills and training.”
In 2017 Mr Hammond announced an increase to Class 4 NICs for self-employed people, a plan revealed by Daily Business, only for him to be forced into a quick climbdown.