LONDON, March 8 British finance minister Philip
Hammond on Wednesday announced an increase in tax rates for the
self-employed, reflecting a growth in the number of such jobs in
the last decade.
Hammond said "class 4" national insurance contributions for
the self-employed, paid by those with profits of 8,060 pounds or
more a year, would increase by 1 percent to 10 percent from
April 2018, followed by a further 1 percent increase in April
He said "class 2" national insurance contributions, for
those with profits of 5,965 pounds or more a year, would be
abolished from April 2018.
As a result of the changes, all self-employed workers
earning less than 16,250 pounds would see a reduction in their
total national insurance bill, he told parliament.
According to the Office for National Statistics, about 40
percent of the more than 2 million new jobs generated since the
beginning of 2008 have fallen into the self-employed category.
The Resolution Foundation think tank has said the tax system
has been slow to catch up to the rapid move towards
self-employment in the so-called "gig economy", where
individuals work for multiple employers day-to-day without
having a fixed contract.
Hammond said that a self-employed person now paid
significantly less in national insurance contributions than an
employee on the same wage, a difference he said was "no longer
"Such dramatically different treatment of two people earning
essentially the same undermines the fairness of the tax system,"
Hammond said in his budget statement to parliament.
"The lower National Insurance paid by the self-employed is
forecast to cost our public finances over 5 billion pounds this
The finance minister also said he would reduce the tax-free
dividend allowance for directors and shareholders of small
private companies to 2,000 pounds, from 5,000 pounds, from April
(Reporting by Kylie MacLellan and Alistair Smout; editing by