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UK Chancellor Philip Hammond is to make an embarrassing U-turn today and scrap a planned increase in National Insurance Contributions (NIC)
In a letter to Conservative MPs, Hammond confirmed the £2bn, 2 per cent increase to Class 4 National Insurance for the self-employed will not go ahead – just one week after he announced the planned increase in his Spring Budget.
The plans were reversed on the basis that they breached his own party’s 2015 manifesto pledge not to hike so-called NICs. It’s not often a political party hold their hands up and admit they had gone against their promises and it certainly takes some big kahunas.
“I am writing to clarify the government’s position with regard to the changes to National Insurance Contributions (NICs) to the self-employed, announced in last week’s Budget,” he told MPs in a letter.
“The measures I announced in the Budget sought to reflect more fairly the differences in entitlement in the contributions made be the self-employed and addresses the challenge of sustainability of the tax base. The Government continues to believe that this is the right approach.
“Since the Budget, however, there has been much comment on the question of the commitments made in our 2015 manifesto… however, in light of the debate over the last few days it is clear that compliance with the ‘legislative’ test of the Manifesto commitment is not adequate.”
He said the government has “decided not to proceed with the Class 4 NIC measures set out in the Budget. We will continue with Class 2 NIC from April 2018.”
I am sure this will be met with delight by self-employed entrepreneurs across the UK, who reacted with anger when the plans were announced.
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