March 21, 2017 at 6:16 AM
The Budget announcement, and subsequent withdrawal, regarding the increase in NI contributions for the self-employed has been a debacle. Philip Hammond was supposed to be a safe pair of hands as Chancellor of the Exchequer, but any more gaffes like this and he will earn the nickname “Butterfingers”!
Simplifying the tax system is a noble aim, and the abolition of Class 2 NIC from 6th April 2018 is a good step along this road. It seems that the Chancellor was trying to claw back some of this lost revenue by his Class 4 NIC hike, but this was politically unacceptable.
The shortfall of revenue that the proposed increase would have raised will now have to be found from elsewhere. No doubt there will be a lot of (clearer!) thinking done between now and the next Budget in the Autumn to decide how to raise this £2 billion shortfall. One of the targets being discussed is the removal of higher rate tax relief on pension contributions. There are not many other areas that can be attacked, given the Tories pledge not to increase income tax or NIC during the period of this Parliament. Or could a snap General Election allow them to re-write their pledges, in which case some of these taxes might come under attack again?
For now, it’s “as you were”.