Rishi Sunak and Boris Johnson’s National Insurance hike branded ‘attack’ on self-employed | Personal Finance | Finance –

Published On: Wed, Sep 8th, 2021

Rishi Sunak and Boris Johnson’s National Insurance hike branded ‘attack’ on self-employed | Personal Finance | Finance


The Government announced yesterday that National Insurance contributions will rise from 12 percent to 13.25 percent from April 2022. The move is designed to pump more money into the NHS and the social care system, which includes the provision of care homes and personal care for those with disabilities or additional needs. However, given that the Conservative Party promised not to raise taxes in its 2019 manifesto, the new approach has sparked controversy.

One group of people there are concerns about is the self-employed, as some feel an extra tax bill on independent workers is unfair given how many have been severely impacted by the pandemic.

Seb Maley, CEO of tax consultancy Qdos, branded the tax increase an “attack” on the self-employed.

He said: “This is another short-sighted attack from the Government on the self-employed.

“Raising National Insurance contributions and dividend tax is a move that directly impacts millions of people working for themselves ‒ people who have arguably been hit the hardest by the pandemic.

“Once again, it seems that the smallest businesses are bearing the brunt of tax reform.

“Yet still, it will be the flexibility, dynamism and skills of the independent workforce that the Government needs most to speed up the economic recovery.”

“The National Insurance tax hike will hit employers too, pushing up the costs of hiring workers on the payroll. It goes without saying that this could stifle employment growth.

“With this in mind, businesses that have needlessly forced their contractor workforce inside IR35 or insisted they work PAYE in response to IR35 reform should rethink this decision immediately.”

Earlier this year, Chancellor Sunak implemented IR35 changes meaning that companies are forced to treat self-employed contractors as employees for tax purposes, without having to provide standard employment rights such as statutory sick, maternity and redundancy pay.

This angered many, with Andy Chamberlain of The Association of Independent Professionals and the Self-Employed (IPSE) telling Express.co.uk that the changes would cause “serious harm”.

On top of this, many self-employed people were excluded from the Self-Employment Income Support Scheme (SEISS) at the start of the pandemic due to strict rules.

READ MORE: National Insurance rise to spark fury: ‘Voters won’t forgive Johnson’

Mr Sunak defended his decision to raise taxes yesterday, saying it is necessary to fund the NHS.

He said: “Properly funded, we can tackle not just the NHS backlog, but we can afford the nurses’ pay rise, invest in the most modern equipment and prepare for the next pandemic.”

National Insurance is a tax on earnings, paid by both employed and self-employed workers.

You build up contributions during your working life, which then allows you to qualify for the state pension and other benefits.

You have to pay National Insurance if you’re 16 or over and either an employee earning above £184 a week, or self-employed and making a profit of £6,515 or more a year.

A Government spokesperson confirmed that working people above the state pension age (66) will contribute to what is being called the Health and Social Care levy.

In April 2022, the National Insurance rate will simply rise to 13.25 percent.

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Then, when systems have been updated by April 2023, workers above pension age will begin to contribute.

The exact additional amount each employee is paying will be visible as a separate line on an individual’s payslip, the Government spokesperson also confirmed.

Pensioners were also met with the bad news that the triple lock will be suspended for the next tax year.

It represents another 2019 manifesto pledge which has been broken.

Thérèse Coffey, the work and pensions secretary, said it would be unfair if older generations benefited from a “statistical anomaly” caused by the coronavirus pandemic.

She said the Government would temporarily abandon its manifesto commitment to ensure pensions rise by whatever is highest out of average earnings figures, inflation or 2.5 percent.



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