Philip Hammond has done a U-turn on a proposed 1% increase to National Insurance Contributions paid by the self-employed, just one week after announcing the unpopular measure in the Spring Budget.
THe U-turn on the rise, which was criticised for unfairly burdening entrepreneurs and going against a government pledge not to raise taxes, was immediately welcomed by industry representatives.
The Chancellor wrote the following note to MPs this morning: “Since the budget… there has been much comment on the question of commitments made in our 2015 manifesto.
“In 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 measures set out in the Budget. There will be no increases in NICs rates in this parliament.”
Nigel Green, chief executive of deVere Group, said: “This is a stunning u-turn by the Chancellor, just a week since his Budget. Whilst we welcome this climbdown, it does show just how out of touch this government is with Britain’s hardworking, already-squeezed and over-taxed entrepreneurs – the lifeblood of the UK economy.”
“Hiking taxes on the self-employed would have only served to punish ambition and undermine aspiration to get on in life.
“This grinding u-turn is now a golden opportunity for this government to go one step further and better incentivise those self-reliant individuals who take on the responsibility, risk and burden of setting up companies and creating jobs and wealth. This is perhaps more important than ever as Britain prepares to launch divorce proceedings from the EU.
“Surely, if the UK is to thrive outside the EU, it should be aiming to keep and attract more entrepreneurial self-starters.”