The Government’s decision to insist that self-employed people continue paying Class II National Insurance Contributions, despite promising that the tax would be scrapped in April 2018, has come under fire from the FSB.
The move is set to net the Treasury more than £350m annually in the three years to 2021.
FSB National Chairman Mike Cherry says the self-employed community has been let down, missing out on a promise to reduce their tax burden.
He said: “This raises serious questions once again about the Government’s commitment to supporting the self-employed. The move is extremely disappointing and flies in the face of tax simplification.
“Class II NICs is a regressive levy that indiscriminately hits sole traders and makes life even tougher for those who are hard-up. Once you’ve reached a minimal income, there’s no tapering or means testing in place at all.
“As things stand, you can be earning below the living wage and still paying two sets of NICs as a self-employed person. All the while you’re wrestling with a Universal Credit system that’s trying to strong-arm you into full-time employment.
“Rather than hitting more than three million self-employed people with this levy, the Treasury should have worked harder to develop more effective ways to protect around 300,000 low-earners and maintain their contributions for the state pension.
“The self-employed were promised in no uncertain terms that this niggling tax would end but have been left high and dry: little thanks for the £270bn they contribute to the economy each year.
“Our sole traders take risks to provide the flexibility and on-demand expertise that keep our economy growing. It’s about time that contribution was properly recognised.
“We are speaking urgently with the Treasury to discuss new measures that can be put in place to support the self-employed, such as around skills and training.”