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Chancellor Philip Hammond has announced a change to the “unfair” tax benefits available to the self-employed, raising certain National Insurance contributions by 1 per cent to 10 per cent from April next year, with a further increase in 2019.
In a relatively light-hearted Budget speech to parliament, he noted a “dramatic” increase in the number of self-employed people in the UK. He said:
There are many good reasons for choosing to be self-employed or working through a company, indeed I have done both. I will always encourage the entrepreneurs and innovators who are the lifeblood of the economy. People should have choices about how they work, but those choices should not be driven primarily by difference in tax treatment.
The employed and the self-employed use public services in the same way but the lower National Insurance contributions from the self-employed will cost the public £5bn this year alone. This is not fair to employees.
Self-employed people earning less than £16,250 will still see a reduction in their total NI bill, he added.