National Insurance contributions to rise

In his first budget speech, Chancellor Philip Hammond announced this week that April 2018 will see a 1% increase (going from 9% to 10%) in Class 4 National Insurance Contributions paid by the Self Employed, increasing a further 1% to 11% in April 2019. Even though the Class 2 National Insurance Contributions abolishment will also come into effect from April 2018, the Self Employed will definitely feel the effect of the hike, with a proposed 2.5million people paying an extra £240 a year.

The Chancellor tried to justify the increase quoting ""Differences in benefits between employees and self employed workers have been substantially reduced in recent years."" However many disagree, countering there is still a much higher risk to the Self Employed, particularly regarding income protection and greater hurdles in personal development such as getting a mortgage.

Mike Cherry, Chairman of the Federation of Small Businesses was pleased the Chancellor had listening to the small business-led campaign but seemed overall disappointed with the budget announcement, writing on the website;

""...the National Insurance rise to 10% next year and 11% in 2019 should be seen for what it is - a £1 billion tax hike on those who set themselves up in business. This undermines the Government's own mission for the UK to be the best place to start and grow a business, and it drives up the cost of doing business...""

Meanwhile minister's have reported that although all those earning between £8,060 and £43,000 annually will be effected at an average cost of 60p a week, workers earning £16,250 or less will be expected to pay less, while those earning above £43.000 annually remain taxed at 2%.

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