Hospitality expert cautiously welcomes National Insurance U-turn

National Insurance U-turn Spring Budget 2017 welcomed by hospitality

A hospitality specialist has commended the Chancellor’s U-turn on National Insurance contributions for self-employed people, but warned industry workers to watch out for replacement taxes or cuts.

Darren Seward, hospitality sector specialist at commercial insurer NFU Mutual, said Philip Hammond’s decision to scrap plans to raise National Insurance contributions were “a relief” to self-employed workers in hospitality and tourism, but warned that the Chancellor would likely try to plug the funding gap elsewhere.

“It may be that Philip Hammond goes after tax reliefs available to businesses such as Business Property Relief – used by many sole traders and partnerships to hand down family businesses free of Inheritance Tax,” he says. “He may think [this] could be eroded without triggering the massive backlash that his measures to increase National Insurance for the self-employed generated.”

Seward warned that there were signs this was already happening, adding: “We’ll be watching the Chancellor’s Autumn Budget closely and alerting those working in the hospitality and tourism industry to measures we feel could unfairly affect their finances.”  

In his Spring Budget on 8 March, Chancellor Philip Hammond announced plans to raise the National Insurance contributions owed by self-employed workers, but has since reversed the decision, following a backlash from the public and Conservative backbenchers.

The latter especially accused him of breaking the party’s 2015 Manifesto pledge to not increase NI, income tax, or VAT.

The plan intended to raise self-employed NI payments from the current nine per cent, to 10 per cent next year, and 11 per cent in 2019, to align it to the 12 per cent currently paid by full-time staff.  

The Spring Budget also introduced three measures to help small businesses, including a cap and discounts on rate increases, and funding allowance for those struggling.

There were also further announcements on the sugar levy, the continued rise in the National Living Wage, and a 3.9 per cent rise in beer and cider tax, but no mention of any changes to the controversial levels of tourism VAT. 

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