Spring Budget 2017 - NIC update
Further to our Budget newsletter you may have heard that the Chancellor has now announced that he will not be going ahead with the proposed increase in class 4 NIC for the self-employed. He previously announced that the rate would increase by 1% to 10% in 2018/19 and a further 1% to 11% in 2019/20. The proposal was controversial not only in respect of the increase itself but with regard to the challenge that this measure broke a manifesto promise in the 2015 election that the Conservatives would not increase national insurance. Philip Hammond has pointed to the small print published subsequently that clarified the position to limit the promise to employer/employee contributions only, however, has now stated that he will not go ahead as he is observing the ‘spirit’ of the undertaking.
As a result, the self-employed will generally see their NICs bill fall from 2018/19. Before everyone gets too comfortable though, it is important to remember that this revenue raising measure was part of an overall budget in the general sense of the word. Both Mr Hammond and Mrs May have both indicated that the cost of this U-turn is likely to come from measures to be announced in the Autumn budget. As ever, we await the next round of changes designed the balance the books with interest
Date: 20th March, 2017
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