Plans to increase National Insurance (NI) levels for self-employed people announced in the Budget last week have been dropped.
A pledge to not increase NI was made in a manifesto back in 2015. The Chancellor broke that pledge last week during the Budget but, after the announcements last week, Philip Hammond has had a change of heart by announcing “There will be no increases in…rates in this Parliament.”
What does this mean?
This is great news in the short term but this almost certainly won’t be the end of the story.
This leaves a rather curious situation entering the build up to the Autumn Budget. There’s obviously no way of predicting what the Chancellor will have in store for us, but the Treasury may be facing a new problem – the increase in NI rate was due to raise over £2bn by 2022. We can expect some changes in the Autumn as it was heavily briefed that the rise in NI was a way to pay for social care and business rate support spending commitments.
It’s worth noting that there’s no backtrack on dividend allowance reduction.