Budget 2017: National Insurance rate rise criticised

Image copyright Getty Images Image caption Among those affected by the increases will be self-employed construction workers

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.

That compares to 12% currently paid by employees.

"The difference in National Insurance Contributions is no longer justified," Mr Hammond said.

Previously self-employed people paid lower NICS than employees, as they received 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.

The increase in the NICS rate will raise £145m a year for the Treasury by 2021-22.

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, often giving up their regular pay cheques to take a chance at creating something great," said Lucy-Rose Walker, the chief executive of Entrepreneurial Spark.

The chancellor said all self-employed people who earned less than £16,250 would be better off.

That is because of a planned abolition of 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, typically amounting to £2.80 a week.


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