National Insurance tax U-turn: Philip Hammond nixes NIC uptick

Finds it's against own party's 2015 manifesto plans

Philip Hammond photo by Inna Sokolovska via Shutterstock

Chancellor Philip Hammond is to scrap a planned hike in UK National Insurance Contributions (NIC) in an embarrassing U-turn today.

In a letter to Tory MPs, Hammond confirmed the £2bn, 2 per cent hike to Class 4 National Insurance for the self-employed will not go ahead - just one week after he announced the plans in his Spring Budget.

The plans were reversed on the basis that they breached his own party's 2015 manifesto pledge not to hike so-called NICs.

“I am writing to clarify the government’s position with regard to the changes to National Insurance Contributions to the self-employed, announced in last week’s Budget,” he told MPs in a letter.

“The measures I announced in the Budget sought to reflect more fairly the differences in entitlement in the contributions made be the self-employed and addresses the challenge of sustainability of the tax base. The Government continues to believe that this is the right approach.

“Since the Budget, however, there has been much comment on the question of the commitments made in our 2015 manifesto… however, in light of the debate over the last few days it is clear that compliance with the ‘legislative’ test of the Manifesto commitment is not adequate.”

He said the government has therefore “decided not to proceed with the Class 4 NIC measures set out in the Budget. We will continue with Class 2 NIC from April 2018.” ®

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