Friday 10 March 2017

Budget 2017: These People Will Hardly Be Affected Since The Announcement

Budget 2017

Investment experts Hargreaves Lansdown (HL) calculate that a self-employed worker earning £30,000 will pay £282 more National Insurance in 2019 than in 2016.

Mike Cherry, national chairman of the Federation of Small Businesses, commenting on the increased costs said: “The national insurance rise to 10 per cent next year and 11 per cent in 2019 should be seen for what it is – a £1 billion tax hike on those who set themselves up in business.

“This undermines the Government’s own mission for the UK to be the best place to start and grow a business, and it drives up the cost of doing business.

“Future growth of the UK’s 4.8 million-strong self-employed population is now at risk. Increasing this tax burden, effectively funded by a reduction in corporation tax over the same period, is the wrong way to go.”

Slashing the dividend allowance from £5,000 to £2,000 in 2018 while “relatively small,” added Suren Thiru of national network the British Chambers of Commerce “will come as a blow to many small business owners. Alongside changes to the tax system for the self-employed, the government risks undermining the UK’s entrepreneurial spirit.

“Many entrepreneurs and sole traders will be disappointed to see significant rises to their National Insurance bills over the coming years. Ministers need to ensure that these business people, who make a significant contribution to the economy, also get the recognition and benefits that correspond to their contribution.

Despite the Chancellor’s promises that he was committed to Britain being the best place to start and grow a business, his National Insurance Budget measures have thrown the nation a curve ball, according to David Bywater, SME Tax Partner with business services giant KPMG.

“His announcement around a NIC rate change for the self-employed is a sticking plaster as the Government looks for a more permanent solution to the disparity between employees and the self-employed.

“For those entrepreneurs who believe reduced NI is the quid pro quo for a lack of paid annual leave and sickness pay, today’s announcement may be a bitter pill to swallow.

“Add to the proposed increases a reduction in the dividend allowance and it was not a great day to be a small business owner.”

"This was despite sweeteners, he added, with the delay to the digital tax reporting micro firms that could alleviate some of the admin burden and the cushion for those businesses coming out of small business rate relief.

Tom McPhail, head of HL’s retirement policy, said: “Ever since the state pension changes of 2016, when self-employed workers’ state pensions were brought into line with employees’, this reform has been on the cards.

“This tax hike won’t be popular with the self-employed, though it’s designed to balance out the long term windfall they received as a result of the new state pension scheme.

“We would like to see the government continue to improve pension provision for the self-employed by bringing them into auto-enrolment, via the self-assessment tax system.’



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