In today’s Budget the Chancellor Philip Hammond announced a 2% rise in Class 4 National Insurance contributions (NICs) for the self-employed over the next two years.
The 2015 Tory party manifesto pledged no increases in NICs; however, the small print referred only to Class 1 NICs. Whether this is enough to avoid criticism will inevitably be seen shortly.
Alan Cleary, managing director of Precise Mortgages, said: “This attack on the growing self-employed population fails to recognise that self-employed workers do not enjoy the same benefits as the employed, such as sick pay and holiday pay. One of the impacts could be that self-employed people may not be able to borrow as much money to buy their home as they will have less net income.
“Self-employed workers are already at a disadvantage to their employed peers when it comes to mortgages and this latest move does nothing to help.”
Barnaby Lashbrooke, founder of virtual assistant platform Time Etc, added: “Instead of preserving Britain’s culture of entrepreneurialism, Mr Hammond has instead imposed heavier NICs on the self employed, who don’t get the luxury of paid annual leave, employer pension contributions or enhanced parental leave pay, and must support themselves through periods of no work.
“For those reasons alone, self-employed workers should not be expected to contribute the same as employees.
“The rise in self-employment has little to do with tax avoidance. It’s partly the result of a skills shortage – talent is in high demand – as well as advancements in technology that have enabled the sharing economy.
“Some suggested reading material for the Chancellor might include the ONS report which attributes a rising trend in self-employment to a preference for part-time work, including among those approaching retirement, as well as the ‘net in-flows’ from unemployment since the 2000s.”
