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An ulterior motive for the Government's National Insurance U-turn?

View profile for Anna Byford

Just one week after we reported on the Chancellor’s announcement in the Budget to increase National Insurance levels for self-employed people, Philip Hammond has this morning dropped the planned tax rise.

Following considerable criticism from entrepreneurs and a backlash from his own backbenchers who accused him of breaking a general election manifesto commitment not to put up National Insurance, income tax or VAT, Mr Hammond has in a letter to Tory MPs, said: "There will be no increases in... rates in this ParliamentIn the light of what has emerged as a clear view among colleagues and a significant section of the public…”.

The planned increase was intended to address the rising deficit of tax revenue as a result of growing numbers of self-employed individuals who pay less National Insurance than employees. 

This morning’s u-turn appears to be good news for the self-employed, many of whom work as part of the gig economy, and a significant embarrassment for Phillip Hammond and the rest of the Cabinet.  However, could it be that the Government has relaxed its stance on self-employed workers in anticipation of possible changes resulting from the impending Taylor Review report?  It won’t be long until we find out with the Review to be completed in the next few months.