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.