National insurance rise for self-employed
The national insurance rates for self-employed people will be increased next year as Chancellor Philip Hammond sought to redress unfairness to workers in employment.
The abolition of Class 2 NICs for self-employed people, announced by former Chancellor George Osborne in 2016 and due to take effect in 2018, will remain.
However, when the Class 2 NIC is abolished, the main rate of Class 4 NICs for the self-employed will increase by 1% to 10%, with a further 1% increase in April 2019.
The Chancellor said the change, which is expected to raise an additional £145m a year by 2021/22, would bring the self-employed more in line with those taxed by their employers and cost an average of around 60p a week per self-employed person in this country.
Hammond said: “The lower National Insurance paid by the self-employed is forecast to cost our public finances over £5bn this year alone.
“That is not fair to the 85% of workers who are employees.”
He also targeted the “extremely generous tax break” for investors with substantial share portfolios, reducing the dividend allowance by 60%.
The allowance will be £2,000, over and above the personal allowance, for director shareholders.
His third measure targeted the professionals who are seen as being responsible for coming up with tax avoidance schemes, with a “tough new financial penalty” being introduced from July for those professionals whose arrangements are later defeated by HMRC.