Prime Minister Theresa May today announced that the Government has decided not to introduce a proposal to increase National Insurance contributions (NICs) for the self-employed in response to a question from Bexhill and Battle MP, Huw Merriman at today’s Prime Ministers Questions.

Huw asked the Prime Minister if she would agree with him that the Government must ensure it has a fair and sustainable tax system in place.  He raised the question in response to lobbying from many local small business owners and sole traders who contacted him about the impact the proposed increased in self-employed NICs would have on their businesses.

The Prime Minister responded that the growing trend towards greater self-employment has created a structural issue in the tax base and that the Government wants to ensure fairness in the tax system. However, rather than bring about the changes to NICs as proposed in last week’s budget the Government has decided to await the outcome of a report being led by Matthew Taylor, Chief Executive of the Royal Society of Arts, into Modern Employment Practices before bringing forward further proposals on taxation. She added “We will not bring forward increases in NICS later in this Parliament.”

Speaking after PMQs Huw said “I am pleased that the Prime Minister has today stated that there will be no increase in NICs for the self-employed. Whilst many of my constituents recognise that it is fair for the employed and self-employed to pay a fair rate National Insurance, which pays for state pensions and the NHS, the risks they take in setting up in business needs to be taken into account when bringing forward new proposals.  I would like to see a package of measures that recognise the self-employed do not have access to a wide range of benefits that paid employees do, such as sick pay, annual leave, paternity allowance. 

Small businesses and sole traders are the backbone of constituencies like Bexhill and Battle which attract very few large employers. With over 22 percent of working constituents in self-employment, Bexhill and Battle has one of the highest proportions of self-employed in the country. It is therefore really important that we have a fair and sustainable tax system in place to support them.”