There was no doubt a huge sigh of relief from the UK’s 4.8 million self-employed workers yesterday as it was announced that the government has halted plans for proposed Class 4 National Insurance hikes, which were set out in the Spring Budget. This is good news for the freelance workforce in the UK, who’ve been hit by numerous legislation changes in recent years.
The planned increase would have seen NICs increase from 9% to 10% from April 2018, and then to 11% from April 2019. Not only was this a blow to the self-employed, it went against promises made in the Conservative 2015 manifesto. Embarrassingly the Chancellor admitted that it was BBC political editor Laura Kuenssberg who first noticed the broken manifesto pledge.
Hammond has now promised that there will be no NIC increase in this government. He commented yesterday,
“Trust matters in politics. And this Conservative government sets great store in the faith and trust of the British people.
“By making these changes, I hope we have shown that we are listening to people and demonstrating our determination to keep to both the letter and the spirit of our commitments.”
Chris Bryce, CEO of IPSE, commented,
“The decision to remain true to the Conservative manifesto pledge is most welcome and we are delighted they have considered the detrimental effect imposing a tax rise on the self-employed population would have. The self-employed add a significant deal to the UK economy and the reversal of these changes allows them to continue doing exactly that.”
While the opposition has labelled the U-turn as a sign of ‘a government in chaos’, it is at least a welcome reprieve for the self-employed and a sign that the government understand the valuable contribution made to the economy by the independent workforce.
IR35 Reform only weeks away
One issue which the government are not relenting on is IR35 reform in the Public Sector, which is set to come into force in the new tax year. In a nutshell, the legislation dictates that it will no longer be down to the Public Sector worker to assess the IR35 status of their assignment. Instead, this responsibility will shift to the end-client. Subsequently, those workers who are assessed as within IR35 will receive a net salary, after tax and NI deductions.
Despite campaigning, it is looking more and more likely that these changes will come into effect on 6th April. However, as was shown by yesterday’s U-turn, things can change, and there’s no reason for us to remain quiet on the subject.
Limited company contractor Gareth Rowell has campaigned against IR35 reform, and has garnered significant support in doing so, with his petition to parliament now at over 30,000 signatures.
For more information on Gareth’s campaign, take a look at his website www.contractorfairdeal.com. Let’s make sure the self-employed are heard!