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Theresa May puts the brakes on self-employed tax hike

Theresa May

Prime minister Theresa May has effectively watered down the Budget announcement of a tax rise for the self-employed following political outcry over the move.

In the recent Budget, Chancellor Philip Hammond announced self-employed workers’ 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.

But the announcement proved unpopular with Tory MPs, many of whom are rebelling against the idea, according to the Times.

At a press conference last night, May said legislation to raise the tax would not be put before MPs until at least the autumn, giving chances to relax the terms.

But May did defend Hammond’s statement that the self-employed have an “unfair” tax advantage.

She said the rising number of self-employed people was “eroding the tax base” that paid for public services.

The Government will publish a review on modern employment practices before the vote on the tax hike.

Hammond will also be speaking to business leaders ahead of the vote to hear their concerns, according to May.

She also denied the Government was breaking a manifesto promise not to raise national insurance contributions.

She said the promise related to not raising class 1 contributions paid by employees and did not apply to the self-employed.

Eighteen Conservative MPs, including Wales minister Guto Bebb, have rebelled over the tax hike plans.

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Comments

There are 5 comments at the moment, we would love to hear your opinion too.

  1. So the self employed erode the tax base – do they indeed?
    They receive less benefits. Hammond mentioned ‘productivity’ in his speech about a dozen times. The self employed are the most efficient and productive in society. Often working enormosly long hours. They take the risks. They actually grow & create employment.
    They are indeed the epitome of a Tory profile and if Mrs May doesn’t understabd this she may as well joinCorbyn.

  2. I could not have put it better myself

  3. Living the Dream Dream ..... 10th March 2017 at 7:44 pm

    Glad to be out of it all.
    I have so many problems now deciding what enjoyable passtime I am going to do tomorrow!

  4. The Tory Manifesto pledge made no mention of different classes of NIC just ‘Commit to No increase in NIC…” – that is the plain truth – before the GENERAL ELECTION. Of course after the election and tories had won with their pledges some clever clogs in treasury sneaked in a change in page 297? of the implementing legislation to restrict pledge to Class 1 NIC . But that was after the election and so of no value to voters. Hammond also said that was in 2015 and implied that as time had passed the pledge didn’t count – and as time always passes I suppose now we know NO Tory pledge can be trusted. As Liberals found out when breaking a pledge (on student tuition fees) the public are unforgiving and the Tories no longer have voters trust. It doesn’t matter of you are self employed or not Tories broke a pledge. They also introduced the up to £290,000 Death Tax to obtain probate from 1 May instead of £250. So do not believe Tory claims in the future about Labour raising taxes.

  5. The fact that this tax rise for private entrepreneurs on multiple fronts is happening under a Conservative party is the most shocking thing to me. Those that put up with *no* holiday benefits, *no* sick pay and job insecurity should enjoy a tax advantage over those on PAYE with all the benefits and notice periods they get. They are exactly the sort who would have voted Tory all their lives and believe strongly in personal responsibility, and not handouts.

    This is manifestly not the same as people who are being paid through an LTD company/Umbrella for a clear tax advantage, acting to all intents and purposes as employees and getting all the benefits including annual leave/sick pay and expenses which I do think is pretty dodgy and should be made completely illegal. There must be some clear distinction between the two and if the current law does not offer this then it needs to be reviewed and replaced to offer a clearer distinction. The law as it stands covers 17000 pages and is very open to interpretation, hence the problem. These policies are something straight out of the Labour party’s jealousy playbook and Theresa May should not be spinning it as social justice.

    Far from leveling the playing field, it is victimizing a small section of the working population who make the biggest difference in companies, bringing specialist knowledge that cannot be readily found in the permanent market, and if we all decided we’d had enough of being treated as a piggy bank went abroad and left them to it, then you’d see the tax base being properly eroded and a huge skills shortage.

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