T A X CHANCELLOR SCRAPS BUDGET PLAN TO INCREASE NICS FOR SELF-EMPLOYED Chancellor Philip Hammond has announced that the government will not now proceed with the increase in Class 4 national insurance contributions (NICs) proposed in his Spring Budget The change would have increased Class 4 NICs from 9% to 10% in April 2018, and to 11% in 2019 ? with the stated aim of bringing the contributions paid by the self-employed closer to the 12% currently paid by employees. However, the Budget proposal prompted an angry reaction ? including from some Conservative MPs ? as it appeared to contradict the 2015 Conservative election manifesto promise not to increase certain taxes, including national insurance. In a letter explaining the U-turn, the Chancellor wrote: ?It is very important both to me and to the Prime Minister that we are compliant not just with the letter, but also the spirit of the commitments that were made. ?In the light of what has emerged as a clear view among colleagues and a significant section of the public, I have decided not to proceed with the Class 4 NIC measure set out in the Budget.? The majority of business groups have welcomed the U-turn. Adam Marshall, Director General of the British Chambers of Commerce (BCC), commented: ?The NICs rise, together with the cut to dividend tax-free allowances, was not viewed favourably by entrepreneurs ? so this move and pause for thought are welcome.? The Federation of Small Businesses (FSB), which lobbied against the NICs rise, gave a broadly positive response. Mike Cherry, its National Chairman, stated: ?We are delighted for our members and all the nation?s self-employed that the Chancellor has recognised the strong opposition to this measure, admitting it was against the spirit of the manifesto on which his party stood, and has now decided to scrap it for the duration of this parliament.? Responding to the news, the Trades Union Congress (TUC) called for the Chancellor to now ?look at how self-employed workers can be treated more fairly?. Frances O?Grady, General Secretary of the TUC, said: ?People who are self-employed should be able to access basic protections like any other worker. That means paid parental leave and pay when you fall sick. FINAL SPRING BUDGET SETS THE STAGE FOR 'BRITAIN'S GLOBAL FUTURE' Chancellor Philip Hammond presented his first - and last - Spring Budget to the House of Commons in belligerent form. Despite revealing upgraded forecasts from the Office for Budget Responsibility, the Chancellor announced that he would adhere to the government's new fiscal plan, with the stated aim of preparing Britain for a 'global future'. UK economic growth is now expected to reach 2% in 20<strong>17</strong>, before falling to 1.6% in 2018. Public sector net borrowing has been revised down to £51.7bn for 2016/<strong>17</strong> and £58.3bn for 20<strong>17</strong>/18. With Brexit approaching, the Chancellor announced a number of significant measures for UK businesses. These include a £435m package for firms in England affected 21. by the business rates revaluation, with a cap on rate rises for those losing existing business rates relief and a £300m local authority 'hardship fund'. As the government's flagship Making Tax Digital initiative draws closer, there was also some good news for smaller firms, with the announcement that unincorporated businesses and landlords with turnover below the VAT registration threshold will have until 2019 to prepare for quarterly reporting. However, a less welcome measure for shareholders and directors of small private firms will see a significant reduction in the tax-free dividend allowance, which will fall from £5,000 to £2,000 in April 2018. Keen to address the UK skills gap, the Chancellor announced the introduction of new 'T-Levels' for 16-19 year olds studying technical subjects from Autumn 2019, as well as funding for 110 new free schools. The Chancellor also confirmed previously announced measures for individuals, including the introduction of the new Tax-Free Childcare scheme, a three-year NS&I Investment Bond and the new Lifetime ISA. Alcohol duties will increase in line with inflation, while duty on tobacco will increase by 2% above RPI inflation. The main rate of the new Soft Drinks Industry Levy, or 'sugar tax', will be set at 18p per litre. Under the Chancellor's new timetable, the next Budget will be held in the autumn, followed by a Spring Statement in 2018.
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