Budget: Hammond hits 2.5m self-employed with National Insurance hike
Treasury sources insisted that the increase from 9% to 11% over two years in the Class 4 contributions paid by the self-employed did not breach the manifesto pledge, as legislation passed after the election specified only that Class 1 contributions paid by employees would not rise.
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Hide AdAnd the Chancellor told MPs that, taken together with a previously-announced decision to abolish Class 2 NICs - also coming into effect from April 2018 - the overall average loss to self-employed people would amount to only 60p a week, while all those earning less than £16,250 will still see a reduction in their bills.
But the Conservative manifesto for the 2015 general election made no distinction between different types of NIC, promising simply: “A Conservative Government will not increase the rates of VAT, Income Tax or National Insurance in the next Parliament.”
Treasury figures showed the Class 4 changes alone will raise just over £2 billion over four years, but taken together with the abolition of Class 2, the overall additional revenue totals £145 million a year.
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Hide AdThe tax hike threatened to overshadow a Budget in which Mr Hammond announced £2 billion for social care in England over three years and announced a £435 million package to ease the burden on firms facing huge hikes in business rates.