The main rate for national insurance contributions (NICs) will increase for the self-employed.
From 2018, class 2 NICs will be abolished and class 4 NICs will rise to 10% from April 2018. The rate will rise again to 11% in April 2019.
The change aims to provide balance to payments made by the self-employed when compared with those in employment.
A self-employed person with profits over £16,250 will have to pay more as a result of these changes.
Announcing the measure in the Spring Budget 2017, chancellor Philip Hammond said that the change “reduces the unfairness in the NICs system and reflects more accurately the current differences in benefits”.
Carolyn Fairbairn, director general at Confederation of Business Industry, said:
“We understand the decision to introduce a simpler tax system by reducing the difference between employee and self-employed national insurance contributions, but it must continue to incentivise entrepreneurship.”
Dr Adam Marshall, director general at the British Chambers of Commerce, said:
“Many entrepreneurs and sole traders will be disappointed to see significant rises to their national insurance bills over the coming years.
“Ministers need to ensure that these business people, who make a significant contribution to the economy, also get the recognition and benefits that correspond to their contribution.”
Contact us today to discuss how these changes may affect you and your business.