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500% tax hike for lower-paid theatre workers is scrapped

The government has backtracked on planned increases to national insurance for the self-employed
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Proposed tax reforms that threatened to hit low-income theatre workers with a fivefold increase to their national insurance payments have been scrapped.

The news has been welcomed by union Equity, which has been campaigning on the issue, as “excellent” for those working in the sector. It previously warned the changes could have made the industry a “no-go area for those from poorer backgrounds”.

In 2016, the government revealed plans to abolish Class 2 national insurance contributions – the category most Equity members pay – with people having to pay five times more in voluntary contributions to access benefits such as state pensions or maternity allowance.

Currently, people earning less than £6,205 a year can make a voluntary contribution of £2.95 a week to receive such entitlements, but the proposed changes would have led to the same group of people paying £14.65 a week, as part of a different NI class, equating to £761 a year.

An Equity spokesman said: “This is excellent news for Equity members and reflects the government’s concern about the impact its proposals would have had on the low paid self-employed. Equity gave detailed evidence on this both in its original consultation response and in subsequent meetings with Treasury officials.”

He added: “We are particularly pleased that members on low profits will no longer face a 500% increase in the cost of making voluntary national insurance payments which would have been the case had these proposals gone ahead.”

The change was meant to be implemented this year, but was later delayed until April 2019. Now, the government has said it will not be brought in at all.

Treasury minister Robert Jenrick said: “The government is announcing today that it will not proceed with the abolition of Class 2 national insurance contributions during this parliament.”

He added: “A significant number of self-employed individuals on the lowest profits would have seen the voluntary payment they make to maintain access to the state pension rise substantially. Having listened to those likely to be affected by this change, we have concluded that it would not be right to proceed during this parliament, given the negative impacts it could have on some of the lowest-earning in our society.”

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