date posted: 17-03-2017

The conservative government have done a complete u-turn on the National Insurance increase for the self-employed which was announced in the Spring budget.


The Chancellor’s original budget announcement would have increased Class 4 National Insurance contributions from 9% to 10% in April 2018, and to 11% in 2019. This increase was being brought in to bring self-employed workers NI contributions closer to the 12% currently paid by employees. 


The measure would have raised £2billion for the treasury and meant that 1.6 million self-employed people would have paid on average £240 more each year.  


Within minutes of the budget announcement the measure was causing controversy and was being heavily criticised on social media and in the press. The Chancellor claimed the move would make things fairer but the self-employed were quick to point out that they don’t benefit from sick pay, holiday pay and maternity or paternity pay.    


The move wasn’t just unpopular with the self-employed. It also came under criticism from other politicians, the general public and the party’s own backbenchers as it broke their manifesto promise.  The party’s general election manifesto explicitly ruled out rises in National Insurance, VAT and income tax during the lifetime of the current Parliament. 


It would appear the criticism and negative media coverage have had the desired effect. The u-turn came just a week after the budget speech and has been welcomed by the self-employed community.    It is great news and will come as a relief to those who are currently self-employed. 


At Sterling we are pleased that the government have reassessed the measure. It is good news not just for individuals who are self-employed but also for anyone considering self-employment in the future and for start-ups and the business community as a whole.  

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