NI rise for the self-employed

What National Insurance rise?

In a spectacular humiliating U-turn, Philip Hammond has scrapped plans to increase National Insurance (NI) for the self-employed.

As this announcement came just days after Teresa May pushed this back for review to the Autumn Budget, there’s been speculation over whether this was a joint decision or one taken solely by Mrs May. Despite it leaving a £2 billion hole in the Budget, it is believed Mrs May is concerned that breaking the party’s manifesto pledge of “no increases in VAT, NI contributions or Income Tax” would do significant damage to the Conservative’s reputation.

As more people are turning to self-employment, Mr Hammond could be forgiven for attempting to reduce the tax gap between the employed and self-employed. He has strongly defended his policy claiming it would’ve evened out the playing field as the self-employed receive many of the same benefits, including a state pension.

Despite his efforts, Mr Hammond has come up against criticism with Shadow Chancellor John McDonnell urging him to apologise. Mr McDonnell expressed that he found it “shocking and humiliating” that Mr Hammond had been forced to withdraw a decision announced one week ago. He also felt that if the Chancellor had spent “less time writing stale jokes for his speech, they may not have been in this mess”.

It seems the Conservatives were split over this decision as some felt the policy was beneficial as it would not only reduce the gap between the employed and self-employed, but provide money that could be focused into Britain’s lowest earners. Ryan Shorthouse, Director of BrightBlue felt “the focus of the Government should be on softening the cuts to in-work benefits, not reversing the Class 4 NI rise”.

Mr Hammond has promised not to increase NI for the rest of this Parliament, and expressed that the Government will be reviewing other self-employed benefits such as paternity rights.


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