Philip Hammond blasted after scrapping £435million tax cut to help self-employed workers
The abolition of Class 2 National Insurance Contributions was announced two years ago but the Treasury went back on it's word to pay for the NHS
CHANCELLOR Philip Hammond last night clobbered White Van Man strivers by scrapping a £435 million tax cut for more than three million self-employed to pay for the NHS.
The Treasury announced that a pledge to abolish Class 2 National Insurance Contributions (NICs) originally promised by George Osborne two years ago was being axed.
It will cost 3.4 million self-employed workers up to £150 a year.
Mr Hammond will use his latest tax raid to raise crucial funds for the NHS - raising more than £1 billion by 2021.
The move sparked outrage from across the political spectrum last night and was branded “yet another betrayal of the self-employed”.
And it comes after the Chancellor’s failed bid to hike Class 4 National Insurance contributions on self-employed workers from 9p to 11p last year.
Scrapping the hated stealth tax was supposed to take effect in April this year but Mr Hammond delayed it by 12 months.
And in a written statement to Parliament last night he completed an astonishing U-turn by announcing he was ditching it altogether.
The Treasury insisted the move was designed to protect 300,000 self-employed workers earning less than £6,000 a year who would have had to move to Class 3 NICs, raising their weekly payments from £2.95 to £14.65.
Scrapping Class 2 NICs was designed to simplify the tax system but officials said they had decided to make the U-turn after realising it wouldn’t have achieved this goal.
But critics dismissed these claims and tore into Mr Hammond for breaking another promise to White Van Man.
The Federation of Small Businesses, which represents Britain’s army of 4.5 million solo workers, said it raised “serious questions once again about the Government’s commitment to supporting the self-employed”.
Senior Tory backbencher Jacob Rees-Mogg said it went against the grain of the Tory party’s values.
He warned: “Self employment has been at the heart of the economic recovery since 2008.
It should be encouraged not penalised.
“The Tory party is meant to be the party of low taxation and the friend of the ambitious.
This U-turn fails on both counts.”
Shadow Chancellor John McDonnell stormed: “This is yet another betrayal of the self-employed.
“These people are the engine of the economy and have been let down again, while giant corporations have seen their tax bills slashed.
Few will ever trust Philip Hammond or the Tories again.”
TaxPayers’ Alliance boss John O’Connell warned that the move would discourage entrepreneurship.
He said: “Millions of self-employed people in Britain who were promised lower and simpler taxes next year will be extremely disappointed by this announcement.
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“High taxes on the self employed discourages entrepreneurship and risk taking.
“If the government wants to make contributions more equivalent between the employed and self employed, then they should instead give those on salaries a tax cut.”
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