Budget: Rise in National Insurance is a ‘sledgehammer blow’ for entrepreneurs

Business experts in the Liverpool city region have offered a mixed reaction to the Budget with considerable dismay at the NI rise for entrepreneurs. Tony McDonough reports.

Self-employed workers are facing a rise in NI contributions

Tax experts in the Liverpool city region have slammed Chancellor Philip Hammond’s decision to raise National Insurance contributions for self-employed workers.

In his final spring Budget Mr Hammond says the self-employed will see their contributions rise from 9% to 11% by 2019.

Karen Campbell-Williams, head of tax at business advisers Grant Thornton in the North West, said the the increase was a “sledgehammer blow” for entrepreneurs.

She added: “I think there is going to be considerable disappointment over this move – which actually runs contrary to the Conservatives’ own manifesto pledge not to increase taxes

“I am not surprised that some in the entrepreneurial/ start-up community are already voicing their disappointment, as it effectively adds to the cost of launching a business.”

Noam Handler, head of tax in the North West at EY, said: “The Chancellor acknowledged today that the world of work is changing, pointing out that he himself was worked both as an employee and as self-employed.

“But those thinking that this might have made him pause before making changes will be disappointed as today he pre-empted the conclusions of Matthew Taylor’s review into the modern ways of working by raising National Insurance contributions for the self-employed.”

Donal Bannon, commercial law partner at Liverpool’s Morecrofts Solicitors was also unimpressed.

He said: “The outlined Corporation Tax cut is welcome but the Government’s tax grab of increasing NIC for self-employed people and reducing the director dividend limit are most certainly not.

“Self-employed people do not benefit from employment rights, holiday pay and other benefits and take all the risk in investing their capital; in the process they pay corporation tax and PAYE for their employees.

“The Conservative Party risks losing its reputation as the natural party of entrepreneurs and business. It is also a breach of its manifesto commitment not to increase NIC.”

Skills boost

There was a more positive response to the Budget from Debbie Tagoe, chair of Greater Merseyside Learning Providers’ Federation.

She said: “The Government’s multi-million pound drive to improve vocational and technical education is a welcome announcement in today’s Budget.

“Investing in our home-grown talent will ensure a more skilled, knowledgeable workforce for the future, which is all the more urgent with the decision to leave to European Union.

Debbie Tagoe welcomed the emphasis on skills and vocational training

“Going to university has become an expected rite of passage for many young people, with apprenticeships and technical routes often seen as the lesser alternative.

“Attitudes are slowly changing as more pupils with high attaining GCSEs and A-Level grades choose the apprenticeships route. Hopefully this latest reform will give vocational education the level of esteem it truly deserves.”

‘Softening the blow’

Richard Thomas, partner at North West law firm DTM Legal, said the Budget contained some “pleasant surprises”.

He explained: “The reduction in public borrowing and the growth figure increase being most welcome.

“It’s good to see that the Chancellor has heeded the pleas from SME’s to soften the blow that the business rates revaluation will cause and the cap of £50 on any increases for business that lose the relief next year will result in many less unhappy business people, albeit it is not clear whether this protection will continue beyond next year.

Richard Thomas, partner at North West law firm DTM Legal

“A review of the overall system is definitely going to be received very positively. It will also be interesting to see how local authorities divvy up the £300m that has been set aside for hard pressed cases in their local areas.”

Brexit uncertainty

Richard Halstead, interim region director in the North West for EEF, the manufacturers’ organisation said: “Current economic indicators offer the Chancellor confidence about the resilience of the UK economy, but we remain some way off from possible Brexit uncertainty.

“As such, the Chancellor is right to be pragmatic, recognising the need to avoid jam today and saving the fiscal jam tomorrow to use wisely if the economy encounters turbulence during the process of exit from the EU.

“This statement shows Government sticking with the challenge of raising productivity levels in the UK economy, this alignment with the industrial strategy priorities will be welcomed by businesses as demonstrating signs of much-needed cross-government coherence.”

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