Plans to increase National Insurance levels for self-employed people, which were announced in the Spring Budget 2016 last week, have been dropped.
Philip Hammond has backed down over his planned Budget for the increase in Class 4 NICs for the self-employed, in a letter to Conservative MPs.
Chancellor of Exchequer said:
It is very important both to me and to the prime minister that we are compliant not just with the letter, but also the spirit of the commitments that were made.
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.
His Budget announcement would have increased Class 4 NICs from 9% to 10% in April 2018 and to 11% in 2019.
Our Tax Partner says:
This is a surprising move from the Chancellor; these kind of U-turns are quite rare so soon after a budget announcement. Although this is good news for our self-employed clients, the Government still need to raise the money that the NIC rise would have brought in.
In his letter to MP’s, the Chancellor has stated that he intends to fund this by “measures to be announced in the Autumn Budget”, so we could yet still see tax rises this year.