Reward Strategy. Incoporating Payroll World.

Chancellor drops plans to increase Class 4 NICs

Chancellor Philip Hammond has performed a U-turn on plans to increase National Insurance contributions (NICs) for the self-employed, announced in last week’s Spring Budget.


In a letter to Conservative MPs explaining his decision, the chancellor said:


“There will be no increases in rates in this Parliament.”


Hammond conceded the plans put forward in the Budget breached the wording of the Conservatives’ pre-election manifesto.


He wrote:


“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 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 measure set out in the Budget.”


Theresa May confirmed the decision during the first Prime Minister’s Questions since the Budget.


She said:


“We will bring forward further proposals, but we will not bring forward increases in NICs later in this Parliament,”


Labour leader Jeremy Corbyn commented:


“It seems to me like a government in a bit of chaos here – a Budget that unravelled in seven days.”


Commenting on the chancellor’s U-turn, Julian Jessop, chief economist at the Institute of Economic Affairs, said:


“The chancellor’s measure on National Insurance contributions introduced last week was ill-thought through. The principle of aligning what the self-employed and employed pay is right, but cutting NICs for the latter rather than raising those for the former would have been a much better way of achieving this.


“Better still, the chancellor should have scrapped National Insurance contributions altogether, including those paid by employers. They are a tax on jobs and wages and getting rid of the burden they place on working families would significantly help lower-income households.”


Former pensions minister Steve Webb tweeted:


“Chancellor needs to find c £600m in Autumn budget to replace Class 4 NICs revenue. What are the odds on a cut in pension tax relief?”

Add New Comment

You might also like

Speak up, step up: Progress in payroll by vocalising your value

Speak up, step up: Progress in payroll by vocalising your value

OpRA oversight to be amended for 2019

OpRA oversight to be amended for 2019

The Rewards 2018: Free entry extension

The Rewards 2018: Free entry extension

Reviewing reward: Are we fulfilling your needs?

Reviewing reward: Are we fulfilling your needs?


Reward Strategy
Reward Strategy RSS

Did you find our website useful?

Thank you for your input

Thank you for your feedback - an online news and information service for the UK’s payroll, reward, pensions, benefits and HR sectors. is published by Shard Financial Media Limited, registered in England & Wales as 5481132, Axe & Bottle Court, 70 Newcomen St, London, SE1 1YT. All rights reserved. Reward Strategy is committed to diversity in the workplace.
© Copyright Shard Financial Media Ltd