U-Turn On Self Employed Class 4 NIC Increases

SPRING BUDGET UPDATE

The Chancellor announced on 15 March that he would not be going ahead with his Budget proposal to increase the National Insurance Contribution rates for self-employed people.

In the Budget of 8 March 2017, he announced that Class 4 NIC rate for the self-employed would rise by 1% to 10% in 2018/19 and by a further 1% in 2019/20. The proposed increases provoked a widespread outcry. Not least because the Conservatives 2015 election manifesto stated “we can commit to no increases in VAT, Income Tax or National Insurance.”

A week later, perhaps appropriately on the Ides of March, the Chancellor issued a letter to MPs saying that there would be no increase to Class 4 NICs “in this Parliament”. However, the abolition of Class 2 NICs will still go ahead from April 2018, meaning that the self-employed will generally see their NICs bill fall from 2018/19.

At Prime Minister’s Questions, Mrs May has said that the government would review areas of difference in the treatment of the employed and self-employed. This will follow a forthcoming report of modern working practices being prepared by Martin Taylor. Mrs May’s comments reiterated a point made by the Chancellor, who also wrote in his letter that “The cost of the changes … will be funded by measures to be announced in the Autumn Budget.”

Watch this space for further U-Turns on the governments tax policies for making tax digital…

Delay launch of MTD project, committee urges

A report from the House of Lords Economic Affairs Committee has called on the Government to delay the launch of its “Making Tax Digital” (MTD) scheme until 2020 and make it optional for many small firms and self-employed workers. The committee’s report found that not enough consideration has been given to support those lacking digital skills: with HMRC’s own research showing that 61% of the self-employed cannot or need help to interact with the Government online. In last week’s budget, Philip Hammond responded to criticism of MTD by delaying its implementation for businesses with a turnover of less than £83,000, the VAT threshold, until April 2019. Lord Hollick, chairman of the committee, said: “This does not go nearly far enough and [the government] needs to further delay the scheme’s implementation, and take a more incremental and gradual approach based upon the evidence.”

The Times, Page: 37    Independent I, Page: 48   Yorkshire Post, Page: 20   Daily Mail, Page: 12

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