Philip Hammond faces furious backlash from cabbies, white van men and even his own MPs over £240-a-year tax raid on self-employed as he breaks Tory election pledge in 2017 Budget
THE Chancellor faced a furious backlash from cabbies, white van men and even his own MPs last night over his £4.7bn tax bombshell on self-employed strivers.
Philip Hammond was blasted by Westminster friends and enemies alike over the average £240-a-year rise.
In a bid to raise cash to bail out the crisis-hit social care and NHS budgets, he is hiking the Class 4 National Insurance contributions paid by the self-employed from nine per cent to 11 per cent in April 2019.
The move will hit 2.84million workers, from plumbers, cabbies and delivery drivers to millionaires.
But it emerged that 1.6million will be earning less than £43,000 a year.
It also breaks a 2015 Election manifesto vow not to raise income tax, VAT or national insurance contributions.
Then-leader David Cameron dubbed this the tax lock.
In a second raid on the self-employed Mr Hammond targeted sole traders who have become incorporated and pay themselves with dividends instead of an annual salary.
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He slashed the tax-free amount they can hand themselves annually from £5,000 to £2,000 a year — an average hike of £320 a year for 2.2million workers.
The moves closes down a tax avoidance loophole on TV presenters who pay themselves via service companies — but also hits 1.4 million basic rate taxpayers.
They range from white van men to pensioners earning modest incomes from stocks and shares portfolios.
Together, the two moves will raise £4.69billion.
Seething small businessmen branded them an assault on entrepreneurs and job creators.
£25k-A-YEAR JET WASH CLEANER
Ashley Brothwood, 26
WHITE van man Ashley reckons the Chancellor’s Budget will put people off starting up on their own.
The dad of one, below, has three staff on PAYE, two vans and is looking to buy a third for his firm.
But he faces a rise in his Class 4 National Insurance and the scrapping of the Class 2.
Overall, he will lose almost £200 in 2019. Ashley, of Telford, Shrops, said: “It would have been nice for the government to have softened the blow elsewhere, but they haven’t. “Sometimes it can feel as if you are being punished for being a self-starter.”
LOSES £200
The Licensed Taxi Drivers Association said: “People who are the backbone of the Conservative party — the aspirational working class — are being hammered”.
The Chancellor insisted the move tackled a major “unfairness” that sees the 85 per cent of workers who are employees pay a higher NICs rate for the same basic state pension or NHS care.
He told MPs he “makes no apology” for the change, which also halts a major rise in the number of people becoming self-employed just to dodge tax.
He also insisted the blow to the self-employed would be eased with the scrapping of Class 2 NICs at the same time, announced by predecessor George Osborne a year ago.
£18k PAINTER AND DECORATOR
Sandie Webster, 36
SELF-employed mum-of-two Sandie will be £60 out of pocket due to the Budget.
She’ll be £46.20 better off when Class 2 National Insurance is axed — but will have to fork out £53.20 more for her Class 4.
Married Sandie, right, 36, from Gainsborough, Lincs, said: “With no holiday or sick pay, I’m think-ing twice about whether I should give up being self-employed and become an employee.
“I work 40 hours a week, and it feels like I’m working for nothing sometimes. Fuel is going up, bills are going up, even food prices are up.”
LOSES £60
Treasury ministers also said a law to enshrine the “tax lock” had made it clear only Class 1 NICs, paid by employees, would be covered.
But as anger mounted last night from Mr Hammond’s own benches, one irate minister told The Sun: “He is a bookkeeper not a chancellor.
“How did No10 allow this to go through after everything the PM said about the Just Managings?”
Warning the move would backfire, Tory MP Jacob Rees Mogg compared it to Mr Osborne’s short-lived attack on bakers in 2012.
He called it “a very short-sighted, pasty-tax style approach for the Treasury to take”.
£12k SOCIAL MEDIA BUSINESS OWNER
Paul Brigstock, 32
PAUL benefitted from the Chancellor’s vow to spare the low-earning self-employed.
He works 86 hours a week to keep his fledgling freelance social media business going and makes £12,000 a year.
Changes to National Insurance will give him £126.20 more in 2018, and £106.80 the year after.
Paul who lives with pregnant wife Emma, 31, and son Oscar, six, in Worthing, West Sussex, said: “It sounds a small amount but is a lot for a family not earning much.
“It’d be great if the government could provide more help for small businesses.”
GAINS £126
Ex-Tory minister Andrew Murrison said it was important the Government “don’t disadvantage self-employed people”.
He added: “This party always has been, I hope always will be, the party that supports white van man.”
Small business expert Liz Barclay pointed out the self-employed did not have sick pay, holiday pay or maternity or paternity perks.
She warned: “This move hits the entrepreneurial spirit where it hurts and will damage the economy in the long run.
“If the Government isn’t careful it could damage their political future, too. Many self-employed entrepreneurial types vote Tory — at the moment.”
— TELLY fans blasted ITV bosses yesterday for making room for their Budget coverage by dumping Loose Women — on International Women’s Day.
Hamming it up...
By HARRY COLE, Westminster Correspondent
THE Chancellor defied his boring reputation with plenty of Budget gags which left some MPs in stitches.
ON BEING KNOWN AS SPREADSHEET PHIL “I turn now to the OBR forecast. This is the spreadsheet bit but bear with me, I have a reputation to defend.”
ON LABOUR’S WOES “They don’t call it the last Labour Government for nothing.”
ON JEREMY CORBYN The Labour leader is “so far down a black hole that even Stephen Hawking has disowned him”.
ON THE FINAL SPRING BUDGET “Twenty four years ago Norman Lamont also presented what was then billed as the last Spring Budget.
“What they (the Treasury) failed to remind me, was that ten weeks later he was sacked. So wish me luck.”
ON LABOUR LEADERSHIP “£270million to keep the UK at the forefront of disruptive technologies like biotech, robotic systems and driverless vehicles — a technology I believe the party opposite knows something about.”
ON SCHOOLS After he pledged to invest an additional £216million over three years, a Labour MP shouted: “No you won’t!” But the grinning Chancellor gave a panto-style reply: “Oh yes we will.”
ON INTERNATIONAL WOMEN’S DAY “I am delighted to use the occasion of International Women’s Day to announce three additional measures. Well, not quite announce them, because my Right Honourable Friend the Prime Minister’s already announced two of them.”
Theresa May: “It’s International Women’s Day!”
Blitz on revenue dodgers
TOUGH new financial penalties on accountants who help the wealthy avoid tax were announced.
Philip Hammond said firms found guilty of setting up complex avoidance schemes will have to pay a fine matching the amount in tax their client tried to dodge.
Four new measures to clamp down on evaders will raise £820million for the public purse.
A tax avoidance scheme was famously used by comedian Jimmy Carr, who admitted at the weekend that the bad publicity over his tax arrangements could have ended his career.
The Treasury is aiming to raise £50million a year from a crackdown on these from July.
A second measure announced by the Chancellor will stop businesses converting capital losses into trading losses to slash their tax bill.
A further blitz will tackle people using foreign pension schemes to avoid tax.
And a final avoidance clampdown will start charging VAT on roaming mobile services outside the EU. Mr Hammond said it will bring the UK “in line with international standard practice”.
Growth is upgraded
By STEVE HAWKES
BREXIT Britain has confounded doom-mongers with a whopping upgrade for growth this year, the Chancellor said.
The Office for Budget Responsibility forecast a two per cent GDP rise just four months after estimating 1.4 per cent.
Boss Robert Chote admitted the economy had entered 2017 with “greater momentum” than the OBR had expected.
He estimated marginally worse growth for the rest of the decade than forecast last November.
Philip Hammond said the economy “continued to confound the commentators” with record employment and a falling deficit.
— THE cost of delivering Brexit will be £1.5billion, including £400million a year for the two departments set up to oversee the split, the Budget said.
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