Self-employed workers will face increases in their National Insurance (NI) contributions to reflect the increased state entitlements received by self-employed workers, Chancellor Phillip Hammond has confirmed in today’s Budget.
Class 4 National Insurance contributions will be increased by 1 per cent to 10 per cent from 2018, and to 11 per cent in 2019, raising £1.5bn in revenue per year by the 2020/21 tax year.
Hammond says the change will cost a typical self-employed worker an extra 60p per week. However, he will not reverse former Chancellor George Osborne’s decision to abolish Class 2 contributions for the self-employed.
Hammond said: “An employee earning £32,000 will pay £6,170 of National Insurance contributions. A self-employed person earning an equivalent amount will pay £2,200, significantly less than half that figure. With the introduction of the new State Pension last year, the self employed now enjoy similar benefits to employed people. Lower NI contributions are forecast to cost over £5bn.”