UK and International Tax news
Chancellor Announces U Turn On Budget NIC Changes
Monday 20th March 2017
The Chancellor has confirmed his intention not to proceed with the Class 4 NIC measures which he announced in the Budget on 8 March 2017.
In his letter to the Chairman of the Treasury Select Committee on National Insurance Contributions for the self employed of 15 March 2017, Philip Hammond explained that although there were commitments made in the 2015 Manifesto, as far as NICs were concerned, the locks legislated for in the National Insurance Contributions (Rate Ceilings) Act 2015 specifically applied to Class I contributions [employer and employee]. He added that “in the light of the debate following the Budget, it is clear that compliance with the ‘legislative’ test of the Manifesto commitment is not adequate”.
The Chancellor went on and wrote that “it is very important to me and the Prime Minister that we are compliant not just with the letter but also the spirit of the commitments that were made”.
The Chancellor confirmed that there would be no increases in NIC rates in this Parliament, Class 2 NICs would be abolished from April 2018 and the cost of the changes [just over £2bn over the four years 2018/19 to 2021/22] will be funded by measures to be announced in the Autumn Budget.
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