15-03-2017

It came as a big surprise today when the government announced that they will no longer be implementing the Class 4 National Insurance increases for the self-employed workforce that we’re laid out in the Spring Budget last week.

Chancellor Philip Hammond confirmed the decision today after increasing pressure and criticism from many factions that the Conservative Party had broken their original 2015 manifesto pledge. He confirmed therefore that there would be no increases to National Insurance rates during the term of this parliament.

There had been a large scale “backlash” – even from back benchers in his own party to the change given the election manifesto had confirmed that National Insurance, tax and VAT would not be increased during this parliament.

The chancellor today stated "It is very important both to me and to the prime minister that we are compliant not just with the letter, but also the spirit of the commitments that were made."In the light of what has emerged as a clear view among colleagues and a significant section of the public, I have decided not to proceed with the Class 4 NIC measure set out in the Budget."

The increases originally announced last Wednesday had meant that with the abolition of Class 2 National Insurance the self-employed would move to the current Class 4 system in April 2018, which today attracts a 9% contribution, and from that date would increase to 10% with a further increase to 11% one year later in April 2019. This will now not be the case and will mean the expected £2bn of extra revenue raised by the increases would not be available to the government.


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