U-Turn on National Insurance
Further to my most recent post on the budget the Chancellor, Philip Hammond has scrapped changes to class 4 National Insurance following protests from the self employed, lobby groups and MP’s.
The Chancellor confirmed that the Government will continue with the abolition of Class 2 NICs in 2018.
The increase in National Insurance was due to raise £2bn over the course of the current parliament, so this gap in the budget will have to be met by other means. Hammond has said that measures to meet this funding gap will be announced in the Autumn budget.
There were many who were in favour of the increase in National Insurance, as the self employed pay 3% less National Insurance than the employed, especially now with the abolition of Class 2 NIC. It is likely that the self employed or small businesses may still have to take a hit to plug this tax gap.