The problem with taxing the self-employed

Last year, when Rishi Sunak, after some dithering, came up with a scheme to help the self-employed during the pandemic, he made clear that it would come with a quid pro ro: higher taxes for the self-employed in the longer run. With his second Budget coming up on 3 March will he take the initiative and do what governments have been threatening to do for years – and jack up national insurance to bring it in line with the rate paid by employees?

The gap between NI contributions – employees generally pay 12 per cent and their employers a further 13.8 per cent, while the self-employed generally pay 9 per cent – is frequently raised as a possible source of extra revenue. Each time the self-employed fight back. Philip Hammond tried his luck and had to retreat, after finding out just how important a group the self-employed are to the Conservative party.