With the Chancellor’s Budget moving to a single event from later this year, yesterday’s final Spring Budget went out with a muffled pop rather than a bang.
After announcing an improved forecast for economic growth throughout the rest of year and revealing that employment has reached a record high, the biggest personal finance changes set out will largely affect the self-employed and small businesses.
Both groups will be hit by rises in National Insurance Contributions and business rates. Currently, the self-employed can have to pay both Class 4 and Class 2 NICs, which are charged at 9 per cent on profits between £8,060 and £43,000 and at a flat rate of £2.80 per week on profits of £5,965 respectively.
From April 2018, Class 2 NICs will be abolished but Class 4 NICs will rise to 10 per cent, before going up again to 11 per cent the year after.
The Treasury said the change ‘better reflects the fact that the differences in contributory benefit entitlement between the self-employed and employees are now small, following the introduction of the new State Pension in April 2016’.
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