Philip Hammond reverses National Insurance plans

Philip Hammond scraps National Insurance plans




Chancellor of the exchequer Philip Hammond has decided not to proceed with the increase to self-employed National Insurance contributions (NICs) set out in the spring Budget.

Last week, Mr Hammond announced that from April 2018, the main rate of Class 4 NICs for the self-employed would increase by 1% to 10%, with a further increase of 1% in April 2019.

However, the chancellor has now scrapped these plans following suggestions that they reneged on promises to lock tax in the Conservative manifesto 2015.

The decision comes despite Mr Hammond’s insistence that the tax-lock commitments had only applied to Class 1 contributions for employer and employee – a pledge that had already been legislated for in the National Insurance contributions (Rate Ceilings) Act 2015.

“The measures proposed in the Budget fall within the constraints set out by the tax-lock legislation and the spending ring-fences,” explained Mr Hammond.

“However, in light of the debate over the last few days it is clear that compliance with the ‘legislative’ test of the manifesto is not adequate.

“In light of what has emerged as a clear view among colleagues and a significant section of the public … there will be no increases in NICs rates in this parliament.”

The Treasury will continue with the abolition of Class 2 NICs from April 2018.

The cost of these latest changes will be funded by measures to be announced in the autumn Budget.

Mr Hammond will make a full statement regarding the decision later this afternoon (15th March).

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