Philip Hammond’s Spring Budget means higher National Insurance for self employed

Despite the fact Britain’s growth within the G7 in 2016 was only second to Germany, Philip Hammond’s most recent budget sees more reshuffles, especially those that are self employed.

Chancellor Philip Hammond /Picture by Stefan Rousseau PA Wire/PA Images.

One of the main talking points to come out of it was the rise in National Insurance contributions for the self employed. As it stands, self employed workers have a £5,000 tax free divindend allowance, This is set to be cut to £2,000. Along with this, the 9% levy on profits is set to rise to 11% by 2019.

The chancellor explained that an employee making £32,000 pays faces a national insurance bill of almost £4,000 more than a self employed worker annually  The rise in contribution is not only set to bridge the cap between self employed and employees but raise money through extra tax revenue.

However, the change does not come without controversy. In 2015, one of the Conservative’s pledges in their manifesto was to not raise national insurance however Hammond rejects his latest re-shuffle has broke the parties promise.

“As the chancellor now, I am working within an extremely constrained environment where we face some new challenges in this country.” Hammond told BBC Radio 4. “We are navigating within those confines to try to prepare Britain for Brexit.”

Chancellor of the Exchequer Philip Hammond making his Budget statement to MPs in the House of Commons.

The chancellor hinted that he would not be easily persuaded on re-evaluating the policy. “I’m always prepared to talk to backbenchers, to listen to backbenchers, but I’ve made a decision here to make the national insurance system a little bit fairer.”

Malcolm Storey, from North East Picture Framing, said:

“Obviously I disagree with it. For people starting off in business it’s going to affect them and are really going to struggle. It’ll cost them money.”

John Appleby, a self-employed barber from Gateshead, will be hit by the raise in National Insurance contribution. He said:

“I pay monthly instalments and they are set to go up. I think it is a disgrace, all the money we send abroad and it is us who need the help, not hit with more taxes. It is always hitting the small businesses not the big tax dodgers.”

Gabib Koc, from Ali Arslan Turkish Barbers feels similar too:

“It feels like big businesses are getting away with stuff and the small businesses are the ones who are getting punished.

I think it is ridiculous, the local businesses are struggling anyway. Its not what we have expected. Especially small local businesses.”

Along with the rise in National Insurance, the budget also seen a rise in alcohol and cigarette prices, £425 million put into the NHS over the next three years and free transport for children from poorer families who go to selected schools.

To find out more about the Spring budget and how it may affect you, visit the Government website.

 

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