‘Lacklustre’ Budget could be stifling, say businesses
Businesses have criticised the Chancellor for increasing National Insurance contributions for the self-employed in the spring Budget.
Philip Hammond was accused of breaching the government’s manifesto when the Tories pledged not to increase the tax for five years.
Instead, the Chancellor told the Commons last Wednesday he would increase the 9% levy on the profits of self-employed people to 10% next year and then 11% in 2019, raising an extra £2bn in tax revenue.
Mr Hammond said the lower National Insurance paid by the self-employed is forecast to cost the public purse more than £5bn this year, which is not fair on the 85% of workers, who are employed and pay higher taxes.
Craig Harman, tax specialist at Perrys Chartered Accountants in Tunbridge Wells, said the move would leave those worst affected out of pocket by £700 a year when the 11% levy comes into force in 2019.
Jane Ollis, chairman of the Institute of Directors Kent branch, felt it was a “lacklustre” Budget and criticised the National Insurance tax as potentially stifling new business.
Jo James, chief executive of Kent Invicta Chamber of Commerce, said: “Many entrepreneurs and sole traders will be disappointed to see significant rises to their National Insurance bills over the coming years.
“Ministers need to ensure these business people, who make a sig- nificant contribution to the economy, also get the recognition and benefits that correspond to their contribution.”
Ben Stepney, senior associate at law firm Thomson Snell & Passmore, which has offices in Dartford and Tunbridge Wells, said: “This discrepancy may seem unjustified on the face of it, but it is worth remembering those who are self-employed do not enjoy the job security, employment rights and access to benefits in kind available to employees. Part of the tradeoff for self-employed workers has traditionally been that they get preferential tax treatment to compensate for the risks they take on.
“This change will come as a blow for many, often low-paid, workers in the gig economy who are treated as self-employed and who already suffer from lack of job security and day-to-day uncertainty about whether there will be enough work available for them.”