Self-employment tax raid slammed

Philip Hammond has been accused of plotting a tax raid on the self-employed with news that the Treasury will raise an extra £145m by 2022 through a series of national insurance hikes.

The chancellor said that to make the system “fairer”, NI contributions will rise for the self-employed by 1% to 10% from April next year. It will rise to 11% in 2019 – raking in millions for Treasury coffers.

But Brian Berry, the chief executive of the Federation of Master Builders, said the double whammy of hikes sent the wrong message to the country’s builders, many of whom class themselves as self-employed.

He added: “Increasing tax on the self-employed is not helpful. If we want to establish a resilient, Brexit-proof economy, we must encourage and support our current and future entrepreneurs in the construction industry and beyond.”

And he warned the increases would put off people thinking of striking out on their own. “The self-employed are the backbone of our economy and the government should tread carefully here,” he said.

Will Waller, market intelligence lead at consultant Arcadis, said the impact of the rises would be especially felt in construction.

“For an industry like construction where 40% of the workforce are self-employed, this could be disproportionately felt.”

He added that recent changes to tax and NI contributions governing some self-employed workers through the IR35 regulations, where people work for a client through an intermediary such as a limited company or partnership, “could have significant impacts on labour market dynamics in the construction industry”.