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Self-employed NICs to rise to 11%

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Self-employed workers will face increases in their National Insurance contributions to reflect the increased state entitlements received by self-employed workers, Chancellor Philip Hammond has confirmed in today’s Budget.

Class 4 National Insurance contributions will be increased by 1 per cent to 10 per cent from 2018, and to 11 per cent in 2019, raising £1.5bn in revenue per year by the 2020/21 tax year.

Hammond says the change will cost a typical self-employed worker an extra 60p per week. However, he will not reverse former Chancellor George Osborne’s decision to abolish Class 2 contributions for the self-employed.

Hammond says: “An employee earning £32,000 will pay £6,170 of National Insurance contributions. A self-employed person earning an equivalent amount will pay £2,200, significantly less than half that figure.

“With the introduction of the new state pension last year, the self employed now enjoy similar benefits to employed people. Lower NI contributions are forecast to cost over £5bn.”

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. ‘An employee earning £32,000 will pay £6,170 of National Insurance contributions’ – no they won’t. They will pay around £2,873. Their employer will pay the extra £3,297. All smoke and mirrors.

  2. So will they now get equivalent unemployment pay? Like the rest they can now ‘enjoy’ a worse State Pension (no SERPS for anyone) in exchange for higher tax. Is this a case of ‘less is more’?

  3. A very small step in the right direction. The value of “unemployment pay” is negligible so to level the playing field with employed people, Class 4 needs to be around 20%

  4. Members of Parliament know nothing about the ‘real’ world, all they care about is retaining their H of P benefits, their DB pensions, their ‘flexible’ expenses and winning the next election. It used to be also, ‘joining the Brussels gravy train’.

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