MPs plan to fight chancellor Rishi Sunak over his move to increase National Insurance tax for the self-employed, bringing it into line with PAYE.
Back in March, the chancellor hinted that he wanted to increase NI for the self-employed, to help pay for the Self-Employed Income Support Scheme (SEISS).
To date, the SEISS has cost the Treasury £13.4bn, with 2.7m self-employed claiming for the first income support grant, and 2.2m accessing the second.
Earlier this year, Sunak was considering whether to raise national insurance contributions (NICs) paid by the self-employed by 3 per cent to pay for the SEISS.
Currently, class 4 NICs for self-employed people stand at 9 per cent a year, while those who are employed pay 12 per cent a year. Increasing this duty would add £500 to the annual tax bill for anyone self-employed earning over £42,000 a year; and £200 for the average self-employed worker.
The chancellor has since delayed his autumn statement, given the fast-moving coronavirus situation and how quickly the Treasury has to think on its feet, expanding the Job Support Scheme.
But the self-employed are still within the Treasury’s sights.
One Tory MP told the Sunday Telegraph: “Self-employed workers have had a pretty rough deal and the idea that [Sunak] would now choose to make it even tougher for them seems perverse.
“Most people do not like the Treasury’s continual and institutional obsession with increasing tax on self-employed people.”
Another Conservative backbencher opposed to the plans told the newspaper lower national insurance contributions reflect the fact that “if you’re self-employed, you are taking slightly more risk”.
They added: “Every business really starts with someone being self-employed and building it from there. If you put people off doing that, then how many businesses will be created?”