An increase in the amount of National Insurance paid by self-employed workers has been greeted with anger by many – with accusations the government has gone back on a manifesto pledge.
From hairdressers to cabbies and builders to lawyers a wide range of businesses rely on self-employed workers as part of a wider structure.
Chancellor Philip Hammond announced in his Budget on Wednesday that in the interests of fairness he would increase the amount of National Insurance Contributions (NICs) made by self-employed people.
But, many have said this goes against the spirit of the Conservative Manifesto in 2015 which said the party would not increase NICs – although it has been claimed this referred to employed workers only.
Mattishall builder Paddy Gallagher, who runs building firm NGPM Builders as a self-employed owner, said he was set to lose between £500 and £600 but his anger was not about the money.
He said: 'If everybody had to pay more for healthcare I can understand that and accept it.
'What I don't think is fair is me having an increase in my National Insurance because I am self-employed and have got off my backside to get out there and work and employ people.'
He added: 'I became self-employed during the recession and started my own company because that was what the Conservative party wanted people to do.
'I would be happy to pay that extra £600 but don't discriminate against me because I am out there working.'
Mr Gallagher, 32, added he did not receive holiday pay or sick pay and if the economy returned to recession and work dried up he would be at risk of earning nothing.
The change to class 4 NICs, paid as a proportion of profits of more than £8,060, comes as class 2 contributions, a flat rate paid on profits of more £5,965, than are scrapped meaning lower earners could benefit overall.
For Thorpe taxi driver Adrian Raymer, 47, the change will be negligible. He said: 'The 2% change for class 4 will be less than the £142 I will save from class 2 being scrapped so I will be slightly better off. It is negligible for us because we don't earn too much.'
However, a leading think tank has said the decision to raise NICs for self-employed workers will not stop them having a tax advantage of thousands of pounds.
Institute for Fiscal Studies (IFS) director Paul Johnson said the 2% rise in Class 4 NICs paid by the self-employed would close a 'small fraction' of the gap with the contributions paid by employees.
He strongly criticised David Cameron's 'foolish' pledge at the 2015 General Election that there would be no increase in NICs, income tax or VAT.
'The 2% increase in NICs for the self-employed closes a small fraction of the gap between employees and the self-employed,' he said.
'In combination with the abolition of Class 2 NICs to be introduced at the same time, it will leave any self-employed person with profits of less than about £15,570 better off.
'The maximum loss affecting those with profits over £45,000 will be £589 per year.
'The tax advantage of being self-employed will still run into the thousands of pounds.'
Mid Norfolk MP George Freeman said: 'Traditionally self-employed people paid less NI because they received less in pension and benefits, but since we have now corrected that imbalance its fair for the treasury to look at reflecting that in contributions.'
Will you be affected by the changes? Let us know by emailing doug.faulkner@archant.co.uk
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