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Government U-turns on planned national insurance increases

The government has backtracked on planned increases to national insurance for the self-employed
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Chancellor Philip Hammond has scrapped plans to increase national insurance levels for the self-employed, following an intense backlash.

In last week’s budget, the government announced measures to increase the NI contributions paid by freelancers earning between £8,164 and £45,000.

However, a letter to MPs from the chancellor has now said this will not happen during the current parliament.

The plans had been branded a “slap in the face” for self-employed theatre workers, who would have faced paying hundreds of pounds more per year.

More than 90% of performers and stage managers, and around a third of offstage staff, are self-employed.

In statement delivered in the House of Commons, Hammond said: “The measures I announced in the budget sought to reflect more fairly the differences in entitlement in the contributions made by the self-employed and addresses the challenge of sustainability of the tax base. The government continues to believe that this is the right approach.

“It is very important both to me and to the prime minister that we are compliant not just with the letter, but also the spirit, of the commitments that were made [in the 2015 election manifesto]. In light of what has emerged as a clear view among colleagues and a significant section of the public, I have decided not to proceed with the Class 4 NIC measures set out in the budget.”

Hammond went on to say that the government would be proceeding with the abolition of Class 2 contributions, as announced last year.

The move has been welcomed by the Critics’ Circle, which represents 500 professional critics in the UK.

Its president, Anna Smith, said: “With full-time jobs for critics at an all-time low, the vast majority of our members are freelance and therefore self-employed. We have no sick pay, no benefits, no job security and work increasingly long hours.”

Despite turning its back on the national insurance proposals, the government will continue to proceed with the Making Tax Digital plans, which were first announced last year and see significant changes to the way self-employed workers submit tax returns.

It was described at the time as a “bureaucratic nightmare”.

Smith added: “An even greater obstacle is looming in plans to force the self-employed to file tax returns four times a year. This administrative burden, coupled with accountancy fees, poses a very real threat to the careers of many of the nation’s finest critics across all our section.”

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