Chancellor reverses decision on NIC rise
21 Mar 2017
Following the announcement in the recent Spring Budget of plans to raise National Insurance Contributions (NIC) for the self-employed, the Chancellor Philip Hammond has announced in an open letter to Tory MPs that these plans will not now go ahead.
In the letter, the Chancellor explains that the plans breached his own party’s 2015 manifesto and that he and the Prime Minister wished to remain “compliant not just with the letter, but also the spirit, of the commitments that were made”.
He said the government has therefore “decided not to proceed with the Class 4 NIC measures set out in the Budget. We will continue with Class 2 NIC from April 2018.”
Commenting on the U-turn, Mike Cherry, National Chairman of the FSB, says that the self-employed already pay a far higher penalty for their position than is reflected in the tax system. Anthony Hilton of the The Standard adds that the U-turn shows that the tax system is broken. He says that Mr Hammond could look to restore his reputation by reforming the tax system.
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