Chancellor Philip Hammond’s U-turn on tax hikes for the self-employed is a “surprising” move, according to a North West business expert.
Karen Campbell-Williams, head of tax at business advisers Grant Thornton, questions how the government will recoup the fiscal shortfall the Budget measure’s reversal creates.
She tells Move Commercial: “Given the staunch defence of the national insurance contributions (NIC) increase by senior ministers after the Budget announcement last week the U-turn is a surprise.
“From a fiscal perspective Mr Hammond now has a £2 billion hole to fill, and it’s going to be very interesting to see how he rises to this challenge, so early on in his career as Chancellor.”
Campbell-Williams goes on to predict that the government will revisit the issue at the earliest opportunity with further measures to balance NIC among self-employed professionals and those in full-time employment.
She adds: “I think the government will revisit the question of the ‘gig economy’. There is a lot of work to do in this area – for instance it’s clearly not fair to bring the self-employed in line with the employed in terms of tax and NIC, but not look at benefits such as sick pay and holiday pay, which the self-employed don’t receive.
“The Chancellor refers to ‘bogus self-employed’ which I hope is not a pre-cursor to further complex tax law to determine who falls on which side of the line.”