In his first Spring Budget Statement address earlier this week, Chancellor Philip Hammond announced that from 2018, Class 4 National Insurance Contributions (NICs) will rise from its current rate of 9% to 10% in April 2018 and to 11% in April 2019, equivalent to a 60p rise for every self-employed worker. 

The move subsequently received widespread condemnation from recruitment trade bodies and organisations representing the contractor and freelance community.

But speaking at a European summit in Brussels, while defending the chancellor’s move, saying it would make the tax system “simpler, fairer and more progressive”, PM Theresa May told reporters: “It won’t be part of the Finance Bill. That is always what happens with National Insurance changes. Those elements will be brought forward in the autumn.”

The PM’s comments were welcomed by Julia Kermode, CEO of the Freelancer & Contractor Services Association (FCSA), an independent trade association whose members support over 110,000 self-employed freelancers and contractors.

Kermode said it was naive of the government to think they could “railroad” in another reform to hit the self-employed without being challenged. 

“I welcome the PM's move to pause to reflect, reconsider the potential impact of raising NICs for this group of workers and wait for Matthew Taylor's report into the modern working practices due out in the summer.

“Hopefully, the government has realised that its argument that the increase would level the playing field between employees and the self-employed is flawed – self-employed workers do not have access to NIC-funded statutory benefits like unemployment benefit or sick pay and when it comes to maternity allowance, employees receive at least 57% more than self-employed workers, based on our analysis of a 2012 XpertHR survey.

“I would like to remind the government that micro-businesses and self-employment account for around 50% of the increased workforce between 2015 and 2016, which underpins the highest employment figures for over a decade.

“I would like to see the government recognising and rewarding this group of workers, not penalising and punishing them with more tax hikes.”