UK government scraps tax cut for the self-employed

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In the quiet days of August, the UK government has discreetly scrapped a little tax cut for self-employed people that would have been a benefit to many marketplace merchants. Class 2 National Insurance contributions will no not now be abolished during this Parliament as was promised. HM Government reversed its position and said the reason was that low-earning self employed people would end up paying more to access the state pension and also said that the change would make the tax system more complex.

The Federation of Small Business (FSB) disagrees:

The self-employed community has been let down today, missing out on a promise to reduce their tax burden. This raises serious questions once again about the government’s commitment to supporting the self-employed. Class 2 NICs is a regressive levy that indiscriminately hits sole traders and makes life even tougher for those who are hard-up. Once you’ve reached a minimal income, there’s no tapering or means testing in place at all. As things stand, you can be earning below the living wage and still paying two sets of NICs as a self-employed person.
– Mike Cherry, Chairman, FSB

A great many marketplace merchants and online sellers are self-employed. That could be as company directors in a limited company or as sole traders. And this proposed change, which was both attractive and fair, was most welcome when it was revealed and it is a disappointment that it has now been reversed. The government is probably correct that it would cause problems for low earning self-employed people but the change certainly didn’t make the tax system radically more complex.

Self-employed people would now be well advised to check in with their accountant to assess the changes. In particular, it may well be that additional contributions will now be required to make sure that your state pension is all ship shape and Bristol fashioned when it comes to claiming it in the years to come.

3 Responses

  1. Tories will be wanting to give another tax break to their wealthy buddies on the back of the self employed, it is to be expected with this lot they are totally out of touch with how so many of us actually have to make a living in this country now.
    Honestly God knows what will replace them next election, but I want this current crop gone.

  2. I am really, really glad this has happened. I am in the position that I am basically retired but am only continuing my business because I need to pay a couple of more years NI to get my full pension. I am only interested in making a small profit to be able to pay the NI. If the NI had been scrapped it would have seriously affected how much pension I would be having for the rest of my life. I’m not a tory but on this they have made the right decision, and what labour say is total rubbish, as usual.

  3. If everyone shouts about having this NI break enough we will be promised it by Corbyn. He promised student loans would be scrapped and debts scrapped Then said i said i would try. He promises the poor more benefits. He promises to pay the EU to stat in the single market. He promises rent caps. Higher pensions. You name it he promises it.

    He could solve the whole EU mess in one go by telling the government where all this money is growing on trees. Then we can plan a future.
    Anyone working once they are in will be stuffed. Just like previous labour governments .
    Tony spent every bean the country had to look good and then when he asked Brown to give him some more and was told there is nothing left he said to him. “You can be Prime Minister I am off”.

    when they get in someone has to pay because more people are on benefits every day and the numbers working keeps dropping.



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