Chancellor scraps National Insurance Increase for the Self-Employed - Haines Watts earth

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What is probably the fastest budget U turn in history has been announced today; the Chancellor has already withdrawn the proposed increases to Class 4 National Insurance. The tax lock act only covered Class 1 NIC’s, however, the Chancellors problems arose because the manifesto ruled out all NIC’s increases.

Initially in last week’s Spring Budget the Chancellor chose to break a 2015 election manifesto pledge with the announcement that National Insurance will increase for the self-employed by a full 2%. This move was to reduce the difference between the rate of NI paid by the employed and self-employed. The Chancellor then went on to state the increase reflected the ‘more equal pension entitlement and benefits’ self-employed people get now; conveniently choosing to ignore the comforts that self-employed people don’t get .i.e. holiday pay or sick pay.

In the face of sustained pressure from the profession, the press and backbench MPs on behalf of the self-employed, the Chancellor has therefore decided not to proceed with this increase, announcing this today in a letter to Tory MPs and a statement, ‘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, ‘ although the Chancellor is still sticking by his argument that the change would have made the tax system fairer.

So, for the time being the self-employed are safe from National Insurance change, but for how long this will last will remain to be seen.

The owner-managed businesses now seek a similar reversal to the reduction in the dividend allowance in days to come however this looks doubtful, with the Chancellor pre-empting this already in today’s press coverage.

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About the author

Jennie Brown

Jennie joined Haines Watts in October 2013 and is now Head of Private Client Tax for Haines Watts East with responsibility for leading the Private Client tax offering across the east midlands region, and ensuring that our clients have access to tax expertise and support at a time when the tax landscape is constantly changing.

Working with clients across all sectors Jennie’s role is to deliver pro-active tax solutions to both owner managed businesses and individuals looking to reduce their overall tax burden. She has developed particular specialisms within Inheritance Tax Planning and the tax efficient structuring of Property Portfolios.

Jennie qualified as a Chartered Tax Advisor while working for another large national accounting firm and has over 13 years’ experience working across a broad range of taxation matters including personal tax, corporation tax and employer solutions. Previous employers have included Grant Thornton, Barclays and Toller’s solicitors.

Jennie appreciates that tax can be quite a daunting subject, especially for newcomers to a business, and she prides herself on being able to explain complex areas of tax in such a way that clients are not blinded by jargon. She truly understands the importance of understanding her clients’ businesses in order to establish what is important to them and always takes a holistic approach in aligning any tax planning with her clients’ personal goals and objectives.

Out of the office Jennie enjoys socialising with friends and family and, in an attempt to keep fit, has recently taken up running.

2 responses to “Chancellor scraps National Insurance Increase for the Self-Employed”

  1. Graham Ashley-Carter.

    Am I right in assuming my affairs are now so small as to unaffected by all this.
    I am concerned however about inheritance tax and whether placing money in a growing business might help ?

    Reply
    • Jennie Brown

      Hello Graham. Thank you for your comment. I would be happy to speak with you to understand if the Budget impacts you and discuss your Inheritance Tax planning options. I have contacted you direct.

      Reply

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