Budget 2017: Philip Hammond’s national insurance hike prompts accusations Tories reneged on manifesto pledge

By: and

Add as a preferred source on Google

Philip Hammond unleashed a set of measures aimed at closing the gap between the employed and the self-employed in today's Budget. 

The chancellor said he would raise the main rate of class 4 national insurance contributions (NICs) for the self-employed by one per cent to 10 per cent from April next year, with a further one per cent increase in April 2019.

Manifesto mistake

Up to 1.6m people are expected to be affected by the changes to NICs, paying an average of £240 more per year from next April, and commentators have pointed out that this proposal goes against a pledge in the Conservative's 2015 General Election manifesto when the party said it would not increase national insurance as part of a five-year tax lock.

Treasury officials were keen to play down the clash with the tax lock, which was introduced in legislation in July last year following the 2015 election.

The Treasury said the National Insurance Contributions Act 2015 made it clear that the tax lock would only apply to class 1 contributions, not class 4 NICs.

“The legislation is the appropriate place for this kind of detail,” a spokeswoman said. “The government is committed to its manifesto commitments.”

Blatant breach

“The increase in Class 4 National Insurance contributions for the self-employed would appear to be a blatant breach of the government’s manifesto pledge from two years ago, which promised not to increase NI for the next five years," said Craig Harman, tax specialist at Perrys Chartered Accountatns.

"This will leave those worst affected out of pocket by £700 per year come 2019 when the 11 per cent rise kicks in."