Self-employed NICs vote delayed until autumn

Philip Hammond announced in this week's Budget that class 4 National Insurance Contributions will increase from 1% to 10% in 2018.

In a statement at the European Council Meeting yesterday, May confirmed that the NICs rise won't be part of the Finance Bill, and that "the Chancellor will be speaking, as will his ministers, to MPs, businesses and others to listen to the concerns".

The government will also publish a paper detailing the full effects of the changes to class 2 and class 4, along with other changes it plans to make on rights and protections for self employed workers including pension rights and maternity pay.

May and Hammond have faced opposition from Tory backbenchers who believe the decision breaks promises made in the 2015 Conservative manifesto which ruled out rises to NICs before 2020.

Justifying the changes, May said: "The decision on national insurance was taken in the context of a rapidly changing labour market in which the number of people in self employment, often doing the same work as people employed more traditionally is rising rapidly.

"The shift towards self employment is eroding the tax base, it’s making it harder to afford the public services on which ordinary working families depend. And this goes some way towards fixing that.

"I think it is fair to close the gap in contributions between two people doing the same work and using the same public services to make the same contribution to wider society."

Responses from the mortgage industry have made clear that the move could have negative outcomes for self-employed borrowers, with Precise Mortgages’ Alan Cleary said the move had done ‘nothing to help’ workers who were already at a disadvantage to their employed peers.

He said: “This attack on the growing self-employed population fails to recognise that self-employed workers do not enjoy the same benefits as the employed, such as sick pay and holiday pay.

“One of the impacts could be that self-employed people may not be able to borrow as much money to buy their home as they will have less net income."