Editor’s comment: national insurance fiasco leaves black hole

The ill-thought plans to hike national insurance rates for the self employed leaves the Chancellor with a large hole in the accounts. The aim to align NICs rates is not wholly irrational but it should be part of a wider review of employment taxes and the changing work environment, says Sara White, editor of Accountancy

Within a week of the Budget, the national insurance hikes were unravelling and Chancellor Philip Hammond was forced to reverse the rise. Number 10 was upset about not being consulted while others bemoaned the failure to follow the Tory manifesto, which promised no personal tax rises through the ‘triple tax lock’, political spin but clearly a vote winner.

The subsequent legislation in Finance (No 2) Act 2015 and the National Insurance Contributions Act, securing the triple tax lock, specified that it was only income tax and Class 1 NICs which would be frozen, not other classes of national insurance such as Class 4 NICs.

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