The government is reneging on its pledge to abolish Class 2 NICs and it also looks likely that the government will axe its flagship New Enterprise Allowance scheme (NEA).
Self-employed groups have criticised the decision as a betrayal and say that the move proves that the government does not support the self-employed.
It was in the 2015 Summer Budget that the scrapping of Class 2 NICs was first announced. This move had been delayed until April 2019, but a written statement was quietly released recently which revealed that the tax would not be abolished in this parliament.
If the tax cut had gone ahead it would have saved the self-employed almost £150 per year.
Andy Chamberlain of the self-employed group IPSE said that the decision to go back on a pledge to abolish Class 2 NICs – an award levy which applies solely to those who are self-employed is a breach of faith with the sector. He then continued by saying that this is a government led attack on people who are self-employed and it is the latest in a barrage of bad decisions that have left the smaller business feeling abandoned.
Mr Chamberlain went on to say that rather than supporting the self-employed the government seemed intent on wringing as much money out of the self-employed as possible.
The decision to not abolish Class 2 NICs was followed a few days later by an announcement that the Chancellor will cut a scheme that had been designed to help people start up their own businesses. The New Enterprise Allowance scheme has helped more than 100,000 people to set up their own businesses and has been regularly praised by the government, but it will not be renewed in the Autumn Budget.