Chancellor Philip Hammond has ditched plans announced in his Spring Budget last week (8 March) to increase national insurance contributions (NICs) for the self-employed.
In a letter to the chair of the Treasury select committee Andrew Tyrie, Hammond acknowledged the rise would have breached commitments made in the 2015 Conservative manifesto but stuck to his view that the change would have made the tax system fairer – as well as raising extra revenue. He said the gap between benefits paid to the self-employed and the employed had closed “significantly” since last April’s introduction of the new State Pension, which he claimed was worth an extra £1,800 to a self-employed person for each year of retirement.
But the proposed hike triggered a backlash from sections of the media and MPs who said it would penalise the type of small business entrepreneurs who are commonly dubbed “white van man”.
Before Hammond’s climbdown NICs for the self-employed were due to rise from 9% to 10% next April and up to 11% in 2019.