March 9, 2017 / 8:45 AM / 4 months ago

UK's Hammond tries to fend off furor over tax hike on self-employed

2 Min Read

Britain's Chancellor of the Exchequer Philip Hammond leaves his official residence in Downing Street in London, Britain, March 7, 2017.Toby Melville/Files

LONDON (Reuters) - British finance minister Philip Hammond sought on Thursday to counter a wave of criticism for raising a tax on some self-employed workers in his budget, saying the measure was needed to get the country ready for Brexit.

Newspapers, including those traditionally supporting the ruling Conservatives, accused Hammond of breaking a promise not to increase national insurance contributions made by the party before the last national election in 2015.

Hammond, who became finance minister in 2016, defended the move as a first step in addressing an unfair difference in tax treatment between the ordinary employed and growing numbers of self-employed workers.

But in a round of media interviews, he faced tough questions about why he appeared to have gone back on the pledges made by former prime minister David Cameron.

"We are all Conservatives. No Conservative likes to increase taxes, national insurance, anything else," he told Sky News. "But ... our job is to do what needs to be done to get Britain match fit for its future."

Some Conservative lawmakers have called on Hammond to drop the changes, which they say will penalize entrepreneurs.

The change in the tax rules was part of Hammond's first full budget which he announced on Wednesday and which came as Prime Minister Theresa May prepares to trigger the process of leaving the European Union.

Hammond said 60 percent of self-employed people - who account for 15 percent of those in work - would see a fall in their national insurance contributions under the changes while the higher-earning 40 percent would pay more.

The budget also included a cut in the tax-free allowance for dividends which will largely affect the self-employed.

Not everyone was critical of Hammond. The Resolution Foundation, a think tank which focuses on issues facing low-income households, said the announcement was "a bold and welcome move to ensure the tax system catches up with the modern world of work."

Writing by William Schomberg; editing by John Stonestreet

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