Budget announced: Self employed face insurance hike

Hammond said this change is in reaction to a dramatic increase in the numbers of people working at self-employed or through their own companies brought about by changes in the economy due to globalisation and the emergence of new tech.

This rate would see a further increase of 1% to 11% from April 2019.

The changes will hit 2.84 million people who will on average be £240 a year worse off.

“Since 2016 self-employed workers now build up the same entitlement to the state pension as employees, a big pension boost to the self-employed”, Hammond said in his Budget speech.

There is already legislation in place and effective from April 2017 whereby public sector bodies who use contractors operating through personal service companies have to decide if those contractors are effectively employees or retain their self employed status.

“This is not fair to employees”.

“It is an easy way for the government to build up £500m in tax from people who can probably afford to pay or have been getting away with not paying as much as they should have”.

Helen Dickinson, chief executive of the British Retail Consortium, said that the £435m cut was “a drop in the ocean” compared with the £25bn a year that the tax raises and that this was “another sticking plaster on a chronically ill patient – an unsustainable property tax higher here than anywhere in the developed world”.

However, on what was International Women’s Day, it is perhaps noteworthy that the Government estimates that significantly more men than women will be affected by this measure. Isn’t it about time the self-employed were forced to pay more?

“The announcement of a consultation process on the risk profiling of large businesses will affect dealers as they fall within the definition of large businesses because of the value of vehicle sales”, said Michelle Malone tax director at ASE, the dealer profitability specialist.

“It is important that the government reimburses them for any loss of income or extra costs incurred as a result”, she added.

“The lower National Insurance paid by the self-employed is forecast to cost our public finances over £5bn this year alone”, Hammond warned.

Asked about the broken promise a Treasury spokesman told Business Insider: “This government has kept its manifesto promises”.

But speaking this morning, Hammond pointed to the legislation that put in statute the “tax lock” which referred only to Class 1 NICs – those paid by employers and employees – rather than the Class 4 NICs which he hiked yesterday. Despite what George Osborne did and what the current chancellor has threatened to do, the Treasury may still want to raise more money by cutting pension tax relief further’.

But in a round of media interviews, he faced tough questions about why he appeared to have gone back on the pledges made by former prime minister David Cameron.

The changes come despite a pledge in the 2015 Conservative manifesto, which promised the party would “not increase the rates of VAT, income tax or National Insurance in the next parliament”.