FARMERS HAIL U-TURN AFTER NI HIKE SHOCK
INDUSTRY figures have welcomed a dramatic U-turn on plans that would have seen most Welsh farmers end up hundreds of pounds a year worse off.
The initial proposals, announced by Chancellor Philip Hammond earlier this month, included a hike in National Insurance contributions (NICs) and tax on company dividends.
This would have meant that NI payments for self-employed people would be, on average, 60p a week higher.
But in a surprise letter to Conservative MPs, the Chancellor last Wednesday confirmed he would not proceed with the planned 2% increase in Class 4 NICs.
Hammond had faced a furious backlash by Conservative backbenchers, who accused him of breaking the manifesto pledge while hitting traditional Tory supporters.
The Chancellor said: “It is very important both to me and to the Prime Minister that we are compliant not just with the letter, but also the spirit of the commitments that were made.
“In the light of what has emerged as a clear view among colleagues and a significant section of the public, I have decided not to proceed with the Class 4 NIC measure set out in the Budget.”
Farming unions had warned that the increase would have badly hit low and middle earning self-employed people, covering most Welsh family firms.
The NI contributions paid by self-employed people who earn profits of over £8,060 a year, were set to increase from 9% to 10% in April 2018, with another 1% rise set to follow in April 2019.
The FUW’s Managing Director, Alan Davies, had been highly critical of the decision to increase the NI contributions of most self-employed people, but to retain the 2% level for those making profits of over £43,000.
But following the e Chancellor’s change of f heart, the union’s pres- ident Glyn Robertss said: “Common sense e has prevailed and we e welcome the U-turn on n the proposed increase se in NICs.
“This increase wouldld have hit farmers acrossoss the UK badly, and that at a time when they are already having to copepe with an increase in busii ness rates, which of course is devolved to Wales.
“Add to that the uncertainty around future agricultural support and those making a living from agriculture are not being put in the most favourable financial conditions.
“We therefore thank the Chancellor for revoking this nonsensical increase.”
Before the U-turn, North Wales MP and Wales Office minister Guto Bebb, who is also a Government whip, said the party should apologise for breaching a pre-election pledge
not increase to National Insurance contributions (NICs).
Mike Cherry, Chairman of the Federation of Small Businesses chairman, added: “We’re delighted for our members and all the nation’s self-employed that the Chancellor has recognised the strong opposition to this measure, admitting it was against the spirit of the Tory manifesto on which his party stood, and has now decided to scrap it for the duration of this parliament.
“The army of self-employed make a massive contribution to the UK economy.
Financial expert, Sean McCann of NFU Mutual, said: “The Chancellor’s u-turn on increasing National Insurance contributions for self-employed people will come as a huge relief to the majority of farmers who are self-employed.
“These measures would have increased financial pressure on self-employed farmers, contractors and the many country people who are already facing a difficult period in the run-up to Brexit.”
However, he also warned that the Chancellor had already sig- nalled he would be looking to redress the gap in revenue caused by the u-turn and could seek other ways to increase taxation of small businesses - or reduce the benefits available to them. “It may be that Philip Hammond goes after tax reliefs available to farmers and businesses – such as Agricultural Property Relief and Business Property Relief – which he may think could be eroded without triggering the massive backlash that his measures to increase National Insurance for the selfemployed generated. “We’ll be watching the Chancellor’s Autumn Budget closely and alerting farmers to measures we feel could unfairly affect their finances.”
But Mr McCann also believed the budget brought good news for the agricultural sector.
“The announcement of ‘smoothing’ for the introduction of new business rates will be welcome news for farm diversification enterprises.
“It’s also a huge relief to country people that that the Chancellor did not impose penalties on diesel vehicle users aimed at reducing pollution in urban areas which we had feared could hit farmers and rural businesses hard.
“There was also welcome news for small businesses that the Government’s planned introduction of statutory quarterly tax returns will be delayed for a year, easing their administration costs.”