Chancellor's U turn on NIC rises

March 15.

Today the Chancellor announced a U turn on the proposed Class 4 NIC rises from last week's Budget. This was primarily in response to a backbench backlash accusing him of breaking a general election manifesto commitment. The plan to increase NIC for self employed has now been dropped and is unlikely to resurface during this Parliament.

Questions remain on how the £2bn shortfall in tax revenues will be funded with the most likely outcome being further borrowing.

During the Chancellor's speech last week, Mazars questioned at the time if Mr Hammond was breaking one of the "triple lock" election tax pledges in 2015. Whilst the manifesto pledge only referred to Class 1 NIC (paid by employees and employers), there was clear feeling that the spirit of those pledges had been broken. It had seemed the Chancellor had weathered the initial storm around the increases and this change of heart may be more driven by future political challenges ahead, for example around the Brexit debate and a future General Election.

Of greater concern to the self employed and business in general will be the increased uncertainty within the UK tax system and the policy that drives it.

Read more on our Budget thoughts here.