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Government U-turn on national insurance rise

16 March 2017

Chancellor Philip Hammond’s plan to raise national insurance payments for self-employed that would have hit almost 100,000 construction workers has been scrapped.

The move, announced in the Budget, would have affected many construction workers and subcontractors with class 4 national insurance contributions rising from 9% to 10% in 2018 and 11% in 2019.

It was aimed at addressing the fact that employees were taxed more heavily than the self-employed.

However, yesterday in a U-turn, the chancellor said he had written to Tory MPs telling them there will be no increase in national insurance payments “in this parliament”.

The move was heavily criticised in the industry, particularly if infrastructure was to be the “backbone” of the industrial strategy.

Latest data from the Office for National Statistics shows the construction industry has around 940,000 self-employed workers, out of a total of 2.3 million employees across the sector.

The chancellor said he had made the decision to drop the changes “in the light of the debate of the last few days”, according to a letter published in The Guardian.

In his letter to MPs, the chancellor said he would continue with the plan to abolish class 2 national insurance contributions from April next year.

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