Self-employed bear the brunt of Spring Budget with additional National Insurance contributions
UK's tax digitization plans for small businesses delayed
Self-employed folk in the UK are to be slapped with additional National Insurance contributions, Chancellor Phillip Hammond announced today.
In his first – and last – Spring budget, Hammond said the move is expected to raise £145m per year.
However, it also raises concerns for workers in the so-called "gig economy" employed by the likes of Uber and Deliveroo, as well as small businesses.
The move to increase National Insurance contributions reverses plans introduced by former Chancellor George Osborne. He had planned to abolish Class 2 National Insurance, the tax self-employed workers pay if they make more than £5,885 profit a year, and was planning to reform Class 4 National Insurance, the tax paid by those making a profit of more than £7,956 a year.
He said: "The abolition of Class 2 NICs for self-employed people announced by my predecessor in 2016 and due to take effect in 2018 would further increase the gap between employment and self-employment.
"To be able to support our public services in this budget and to improve the fairness of the tax system, I will act to reduce the gap to better reflect the current differences in state benefits."
In response to concerns that HMRC's timetable to make tax digital by introducing quarterly reporting were overly ambitious, he said the government would delay the timetable for small businesses with a turnover below the VAT threshold for one year.
Smaller businesses will now have until April 2019 before Making Tax Digital is mandated for unincorporated businesses and landlords with turnover below the VAT threshold, he said.
The Treasury Select Committee had previously warned there are "serious shortcomings" in the current £1.3bn tax digitisation plans.
Elsewhere Hammond promised to introduce UK VAT on telecoms for roaming charges raised outside the EU in an attempt to align with international practice and prevent avoidance of tax.
Prior to the Budget the government had trailed a £500m fund for electric vehicles, robotics and artificial intelligence. In his announcement Hammond quipped: "Driverless vehicles are something I believe the party opposite knows something about."
Rehashing plans already announced by the government to create an investment pot of £740m for digital infrastructure, Hammond said the government has earmarked £16m for a new 5G mobile technology hub and £200m for local projects to leverage private sector investment in full-fibre broadband networks starting this year. ®