Budget 2017: St Albans business groups nervous about National Insurance changes

The self-employed have been hit by a national insurance rise.

The self-employed have been hit by a national insurance rise. - Credit: Getty Images/iStockphoto

St Albans business groups have expressed concerns about the changes to National Insurance and dividends announced in this week’s Budget.

Phillip Hammond MP revealed self-employed people will contribute two per cent more from their profits towards state benefits over the next two years.

He also told the Commons company directors will see their dividends’ tax-free allowance fall from £5,000 to £2,000.

The St Albans Chamber of Commerce treasurer Mark Fordham said: “Whilst the increase in National Insurance contributions for the self-employed and reduction in the tax-free dividend allowance for company owners will not be welcomed, changes to the proposed making tax digital regime will help business prepare for its introduction.”

The amount self-employed people pay towards National Insurance has traditionally been lower, as they have less access to benefits like pensions.

Mel Hilbrown from the St Albans Enterprise Agency said: “If you are a limited company or you’re self-employed, it’s not good news.

“A number of the small businesses that will be affected started during the recession, and kept the jobless number under control so the government has had major benefits out of the self-employed.

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“They are still paying one per cent less than employees, but they do not get sick pay or maternity pay.

“That the government did not put contributions up to the same level as employees shows they recognise self-employed people do not get the same benefits.”

Mr Hilbrown also highlighted the impact this will have on small businesses just as Britain is preparing to leave the single market.

“I personally do not favour anything that puts a burden on small businesses, as we need as much small business activity as possible in the run up to Brexit.”

The Prime Minister has since announced the legislation to affect this change will not be brought forward until the autumn.

County councillor David Williams, portfolio holder for enterprise, said: “The decision to raise extra revenue to fund social care from the National Insurance contributions of the self-employed does reflect their historically beneficial treatment.

“The judgement must be that it won’t undermine the vital contribution the self-employed have made to the country’s recovery and job creation since 2010.”