Early on in Philip Hammond’s budget was an announcement that will affect millions of people. But it hits those who may already be in a vulnerable position: the self-employed.
Hit ’em hard
The Chancellor said that National Insurance Contributions (NIC) for self-employed people are going to increase. Currently, anyone self-employed has been paying a set £2.80 a week (Class Two NIC), but this stopped as of 31 January 2017’s tax return. And then, 9% on earnings over £8,060 (Class Four). Up to £43,000. But from 2018, Hammond will be increasing the Class Four contribution to 10%. And then by another 1% in 2019.
We will not raise VAT, National Insurance contributions or Income Tax.
It also repeated the promise on pages eight and ten. So it would appear the Tories have gone back on their manifesto promise.
Hit ’em fast
The BBC’s Norman Smith bluntly said:
Tax rise Claxon. Whoop. Whoop. National insurance tax rise for self employed #budget2017
— norman smith (@BBCNormanS) March 8, 2017
And critics were quick to point out its faults:
#Budget2017 biggest rate of growth has been in female self-employment but many r low paid workers who would prev be employed
— Sam Smethers (@Samsmethers) March 8, 2017
Hit ’em low, Hammond
There are currently 4.75 million self-employed people in the UK; 15% of the entire workforce. On average, a self-employed person earns around £240 a week. But this is 15% less in real terms than in 1994/95. And when worked out as a yearly wage (£12,480), this is well below the national average of £27,600. So any rise in NIC will be hitting some self-employed people hard.
NICs were designed to pay for benefits, such as welfare payments and health service provisions. But with the NHS currently suffering a funding crisis and the welfare system constantly being ‘reformed’, the question could be asked exactly where this additional NI will end up? It certainly won’t be in the pockets of those already struggling.
– Read more from The Canary on Budget 2017.
Featured image via Flickr
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