BUSINESS leaders have slammed the UK government for hitting thousands of self-employed people in the pocket by imposing a tax hike.
The likes of plumbers, cleaners and painters and decorators will see their National Insurance bills rise as a result of measures announced by Chancellor Philip Hammond in last week’s Budget.
There are around 8,000 self-employed people in Renfrewshire and almost 6,000 in East Renfrewshire, with the Federation of Small Businesses (FSB) expressing concern about what the future holds for them.
Alan Lyall, chair of the FSB’s Renfrewshire and Inverclyde branch, said: “The Chancellor chose to put extra pressure on the self-employed.
“Not only does it undermine the Chancellor’s plan for the UK to be the best place to start and grow a business, it also puts at risk the success of small towns such as Bridge of Weir, Houston, Howwood, Newton Mearns and Giffnock, where we have higher rates of self-employment.
“Many of the self-employed are people on relatively modest incomes, without the benefit of things like paid holidays and sick leave.
“Given the spiralling cost of doing business, they need help and support from government, not additional tax burdens.”
Mr Hammond said there had been a “dramatic increase” in the number of people working as self-employed and that the reason for doing so should not be “differences in tax treatment”.
The disparity between the rates paid by the self-employed and employees “undermines the fairness of our tax system”, he added.
Class 4 National Insurance contributions will go up from nine per cent to 11 per cent by April 2019.
A separate category of National Insurance payments, Class 2, are already due to be abolished from 2018.
Mr Hammond said that, taken together, the two changes meant National Insurance payments for a self-employed person would be an average of 60p a week higher.
He claimed the different National Insurance rates had traditionally reflected a disparity in pension and benefit entitlement between self-employed people and those in employment.
But he said these had now been “very substantially reduced” and that the government would also consult on addressing disparities in relation to parental benefits.
The government immediately faced accusations of breaking a Tory manifesto pledge not to increase VAT, National Insurance contributions or income tax.
However, ministers said this promise related to the class of National Insurance paid by employees, not the self-employed.