3.6m lose out on tax cut as Hammond delays NI shake-up

MORE than three million people will not get a tax cut in April after Philip Hammond, the Chancellor, delayed a shake-up of National Insurance by 12 months.

The policy, first unveiled by George Osborne, Mr Hammond’s predecessor, in 2016, would have seen 3.6 million self-employed workers paying less in National Insurance.

The change comes just weeks before his Autumn Budget and after Mr Hammond had to drop an increase to “Class 4” National Insurance Contributions (NICS) after an outcry following the last Budget in March. Mr Hammond said in March this year that he would press ahead with the plans to abolish “Class 2” NICS, which are paid at a flat rate of £2.80 a week by anyone making profits of more than £5,965 a year.

However, the Chancellor said yesterday that the law to enact the changes – the National Insurance Contributions (NICS) Bill – will be introduced next year, which means that any changes will take effect from April 2019, not April 2018 as planned. Mr Osborne, who left Parliament at the election and is now a newspaper editor, wrote on Twitter: “Not sure why the Government have delayed this tax cut for selfemployed people announced in my 2016 Budget.”

Treasury officials said the delay had been caused after “legitimate concerns” were raised that self-employed workers on low incomes would see their pension entitlements and benefits hit.

Andrew Jones, a Treasury minister, said: “The Government has decided to implement a one-year delay to allow time to engage with interested parties and parliamentarians with concerns relating to the impact of the abolition of Class 2 NICS on self-employed individuals with low profits.”