Asian woman standing in front of House of Commons, Westminster Palace, self-employed national insurance concept

Pensive mood: backbench Tory MPs are ready to fight the Treasury over plans to hike national insurance for self-employed

MPs plan to fight chancellor Rishi Sunak over his move to increase National Insurance tax for the self-employed, bringing it into line with PAYE.

Back in March, the chancellor hinted that he wanted to increase NI for the self-employed, to help pay for the Self-Employed Income Support Scheme (SEISS).

To date, the SEISS has cost the Treasury £13.4bn, with 2.7m self-employed claiming for the first income support grant, and 2.2m accessing the second.

>See also: Rishi Sunak plans grants for small businesses hit by hard lockdown

Earlier this year, Sunak was considering whether to raise national insurance contributions (NICs) paid by the self-employed by 3 per cent to pay for the SEISS.

Currently, class 4 NICs for self-employed people stand at 9 per cent a year, while those who are employed pay 12 per cent a year. Increasing this duty would add £500 to the annual tax bill for anyone self-employed earning over £42,000 a year; and £200 for the average self-employed worker.

The chancellor has since delayed his autumn statement, given the fast-moving coronavirus situation and how quickly the Treasury has to think on its feet, expanding the Job Support Scheme.

>See also: £40m funding for hospitality firms in Scotland – what we know so far

But the self-employed are still within the Treasury’s sights.

One Tory MP told the Sunday Telegraph: “Self-employed workers have had a pretty rough deal and the idea that [Sunak] would now choose to make it even tougher for them seems perverse.

“Most people do not like the Treasury’s continual and institutional obsession with increasing tax on self-employed people.”

Another Conservative backbencher opposed to the plans told the newspaper lower national insurance contributions reflect the fact that “if you’re self-employed, you are taking slightly more risk”.

They added: “Every business really starts with someone being self-employed and building it from there. If you put people off doing that, then how many businesses will be created?”

Further reading

Local lockdowns only make the problem of late payment worse

 

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