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| Budget 2017: National Insurance rate rise criticised | Budget 2017: National Insurance rate rise criticised |
| (35 minutes later) | |
| Rises in National Insurance Contributions (NICS) for self-employed workers have been criticised as "penalising entrepreneurs". | Rises in National Insurance Contributions (NICS) for self-employed workers have been criticised as "penalising entrepreneurs". |
| Chancellor Philip Hammond announced in the Budget that the rate for Class 4 NICS would rise from 9% to 10% in April 2018, and to 11% in 2019. | Chancellor Philip Hammond announced in the Budget that the rate for Class 4 NICS would rise from 9% to 10% in April 2018, and to 11% in 2019. |
| That compares to 12% currently paid by employees. | That compares to 12% currently paid by employees. |
| "The difference in National Insurance Contributions is no longer justified," Mr Hammond said. | "The difference in National Insurance Contributions is no longer justified," Mr Hammond said. |
| Self-employed people have traditionally paid lower NICS than employees, as they receive fewer state benefits. | Self-employed people have traditionally paid lower NICS than employees, as they receive fewer state benefits. |
| But the chancellor said the self-employed now had equal access to the new state pension. He also said that the government would consult on parental benefits, some of which self-employed people cannot claim. | But the chancellor said the self-employed now had equal access to the new state pension. He also said that the government would consult on parental benefits, some of which self-employed people cannot claim. |
| The chancellor said all self-employed people who earned less than £16,250 would be better off. | The chancellor said all self-employed people who earned less than £16,250 would be better off. |
| Around half of the 4.8 million workers registered as self-employed earn less than £13,000, according to the think tank the Resolution Foundation. | Around half of the 4.8 million workers registered as self-employed earn less than £13,000, according to the think tank the Resolution Foundation. |
| As a result it said most such workers - such as low-paid hairdressers - will be better off by 2019/20. | As a result it said most such workers - such as low-paid hairdressers - will be better off by 2019/20. |
| Winners and Losers | Winners and Losers |
| source: Resolution Foundation | source: Resolution Foundation |
| But the rise, which will cost those affected an average of 60p a week, was criticised by entrepreneurs. | But the rise, which will cost those affected an average of 60p a week, was criticised by entrepreneurs. |
| "Increasing National Insurance rates for the self-employed could be a further step by the government to penalise those who are taking risks and starting a business," said Lucy-Rose Walker, the chief executive of Entrepreneurial Spark. | "Increasing National Insurance rates for the self-employed could be a further step by the government to penalise those who are taking risks and starting a business," said Lucy-Rose Walker, the chief executive of Entrepreneurial Spark. |
| Others said it was unfair that the self-employed would have to pay more, when they do not receive the same level of state benefits. | Others said it was unfair that the self-employed would have to pay more, when they do not receive the same level of state benefits. |
| "Self-employees are subject to a lower national insurance contribution because they do not receive the same entitlements and benefits as their employed counterparts - such as holiday and sick leave," said Chas Roy-Chowdhury, head of tax at the Association of Chartered Certified Accountants. | "Self-employees are subject to a lower national insurance contribution because they do not receive the same entitlements and benefits as their employed counterparts - such as holiday and sick leave," said Chas Roy-Chowdhury, head of tax at the Association of Chartered Certified Accountants. |
| Those paid less than £16,250 will be better off because of a planned abolition of a different class of NICS - Class 2 - in April 2018. | |
| Under Class 2 NICS, self-employed workers pay 2% on qualifying earnings between £5,965 and £8060, amounting to £2.80 a week. | Under Class 2 NICS, self-employed workers pay 2% on qualifying earnings between £5,965 and £8060, amounting to £2.80 a week. |
| The increase in the NICS rate will raise £145m a year for the Treasury by 2021-22. | The increase in the NICS rate will raise £145m a year for the Treasury by 2021-22. |
| Matthew Taylor, head of the Royal Society of Arts, is due to produce a report on how the self-employed are taxed later this year. | Matthew Taylor, head of the Royal Society of Arts, is due to produce a report on how the self-employed are taxed later this year. |
| He has already said that the Treasury is missing out on millions of pounds, as a result of the workers who have been designated as self-employed. | He has already said that the Treasury is missing out on millions of pounds, as a result of the workers who have been designated as self-employed. |