PHILIP Hammond has been commended for seeing “the error of his ways” and performing a U-turn on National Insurance (NI) for the self-employed.
In a letter to Conservative MPs, the Chancellor said he would not proceed with the planned two per cent increase in Class 4 National Insurance Contributions which he announced just a week previously.
Nigel Smith, managing partner of Bournemouth’s Ellis Jones Solicitors – who hit the headlines in the Echo after describing the National Insurance rise as “a kick in the teeth” for owner managed businesses – said: “The decision to drop the increase is very welcome news. We should be doing everything possible to encourage this vital sector. I’m pleased that the chancellor has seen the error of his ways so soon after the budget.”
Ian Harlock-Smith, tax director with Saffery Champness Chartered Accountants in Bournemouth, said: “Today’s announcement from the chancellor did not come as too much of a surprise in light of the furore surrounding his breach of the manifesto promise not to raise National Insurance.
“This will of course be welcome news for the self-employed but is surely only delaying the inevitable. It is likely to raise questions about how the chancellor will fill the void left by this U-turn, something I suspect that will be addressed in the autumn budget later this year.”
Lisa Macpherson, head of tax technical with chartered accountants and business advisers PKF Francis Clark in Poole, said: “Both the prime minister and the chancellor tried to defend the rise in NI for the self-employed but, ultimately, they’ve had to admit defeat. However, they’ll have to make up the shortfall from somewhere else so expect some creative revenue raising in the autumn budget.”
Mike Cherry, chairman of the Federation of Small Businesses, said: “We are delighted for our members and all the nation’s self-employed that the chancellor has recognised the strong opposition to this measure, admitting it was against the spirit of the Tory manifesto on which his party stood, and has now decided to scrap it for the duration of this parliament.
“The army of self-employed make a massive contribution to the UK economy.”