The Government has announced that self-employed people will continue paying Class II National Insurance Contributions (NICs), despite promising that the tax would be scrapped in April 2018.
The move is set to net the Treasury more than £350 million annually in the three years to 2021.
Federation of Small Businesses (FSB) National Chairman Mike Cherry said:
“The self-employed community has been let down today, missing out on a promise to reduce their tax burden. This raises serious questions once again about the Government’s commitment to supporting the self-employed.
“The move is extremely disappointing and flies in the face of tax simplification.
“Class II NICs is a regressive levy that indiscriminately hits sole traders and makes life even tougher for those who are hard-up. Once you’ve reached a minimal income, there’s no tapering or means testing in place at all.
“As things stand, you can be earning below the living wage and still paying two sets of NICs as a self-employed person. All the while you’re wrestling with a Universal Credit system that’s trying to strong-arm you into full-time employment.
“Rather than hitting more than 3 million self-employed people with this levy, the Treasury should have worked harder to develop more effective ways to protect around 300,000 low-earners and maintain their contributions for the state pension.
“The self-employed were promised in no uncertain terms that this niggling tax would end but have been left high and dry: little thanks for the £270 billion they contribute to the economy each year.
“Our sole traders take risks to provide the flexibility and on-demand expertise that keep our economy growing. It’s about time that contribution was properly recognised.
“We are speaking urgently with the Treasury to discuss new measures that can be put in place to support the self-employed, such as around skills and training.”
Notes to editor
About FSB
As the UK’s business support group, FSB is the voice of the UK’s small businesses and the self-employed. Established over 40 years ago to help its members succeed in business, FSB is a non-profit making and non-party political organisation that’s led by its members, for its members. As the UK’s leading business campaigner, FSB is focused on delivering change which supports smaller businesses to grow and succeed.
FSB offers members a wide range of vital business services, including access to finance, business banking, legal advice and support along with a powerful voice in Government. Each year FSB also runs the UK’s Celebrating Small Business Awards. More information is available at www.fsb.org.uk. You can follow us on twitter @fsb_policy and on Instagram @fsb_uk.
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About FSB
As the UK’s largest business support group, FSB is the voice of the UK’s small businesses and the self-employed. Established over 40 years ago to help its members succeed in business, FSB is a non-profit making and non-party political organisation that’s led by its members, for its members. As the UK’s leading business campaigner, FSB is focused on delivering change which supports smaller businesses to grow and succeed.
FSB offers members a wide range of vital business services, including access to finance, business banking, legal advice and support along with a powerful voice in Government. Each year FSB also runs the UK’s Celebrating Small Business Awards. More information is available at www.fsb.org.uk. You can follow us on twitter @fsb_policy and on Instagram @fsb_uk.