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Tax break for self-employed costs extra £2bn


The cost of a tax break for the self-employed is set to cost the Treasury an additional £2bn following the move to a flat rate state pension.

The Financial Times reports for the year to April 2017, the Treasury estimate of the cost of reduced national insurance contributions for the self-employed has gone up by 59 per cent from £3.2bn to £5.1bn.

The self-employed pay an equivalent of employee NI at a rate of 9 per cent, rather than 12 per cent paid by employees.

In April, the new state pension saw an end to the 1.4 per cent NIC rebate for workers who contracted out of the state second pension.

Tax barrister Jolyon Maugham told the newspaper: “We should be very concerned about the pace and scale of changes in our employment market. The Autumn Statement disclosed that in the six months since March there had been a £90bn fall in forecast receipts from income tax and NICs over the scorecard period.

“The £2bn increase in the cost of the self-employed NICs subsidy – after years of no change – doesn’t catch dividends and so will very substantially understate the true cost of that subsidy. Sadly, Treasury’s only response to date is to move a few deckchairs on the Titanic.”



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

  1. I must be missing something here: self-employed people don’t get dividends do they?

  2. JM needs to move a few chairs in his research

  3. I think he is referring to single owner one director companies, which most bankers, lawyers and accountants refer to as being self employed

  4. If he is referring to single owner one director companies, how come he states that the self-employed pay an equivalent to 9% NICs? I don’t recall one director companies getting special NIC terms. This is very muddled thinking.

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