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Self-employed NICs rise dropped
The chancellor has announced that plans to increase national insurance contributions (NICs) for the self-employed have been dropped.
Introduced in Spring Budget 2017, class 4 NICs were set to increase to 10% from April 2018 before rising again to 11% in April 2019.
MPs criticised that the plans were not in line with the general election manifesto commitment not to increase NICs, income tax and VAT.
Due to reaction from individuals, media and businesses alike, chancellor Philip Hammond has decided that the change will no longer go ahead.
Plans to abolish class 2 NICs will still proceed from April 2018.
Commenting on the announcement, Steven Cameron, pensions director at Aegon, said:
“While the u-turn is likely to be welcomed by many self-employed people, the policy has put the spotlight on the issue of NI and the rights and benefits of those working in the gig economy.
“Delaying the increase allows more time for the government to come up with a pension solution for the self-employed, which could include rebating the increase in NI into a private funded pension of the self-employed individual’s choice.”
Sean McCann, chartered financial planner at NFU Mutual, said:
“The true cost of this decision may still be borne by the self-employed. It’s clear that the chancellor will look to recoup money from other sources and many tax reliefs will be in his sights.”
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