A break for the self-employed...?

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So this week's UK budget announced that taxes for the self-employed are going to be cut from April 2024.

Class 4 NICs for the self-employed will be reduced from 9% to 8%, which you pay for profit above around £12.5K and the evil Class 2 NICs are going be abolished, which are currently a flat rate of just over £3 a day once you start earning just under £12K.

This will save the average self-employed person on £28,200 a year £350 in 2024/25.

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Especially good for the lower income self-employed

And ABOUT TIME!

I've always hated those NIC2 contributions. They've always struck me as just simply shafting the self-employed relative to those employed by someone.

You start paying them at just under £12K, it's like a hard-line for a flat rate tax... earn above threshold, BOOM! £3 a week tax, earn below it, £0!

It never made any sense.

But the mid to higher earning employed still get a better deal..

However while these changes are welcome, the employed are getting a 2% NIC cut, from 12% down to 10%, narrowing the overall gap on NC contributions on wages and profits.

So I don't personally regard this as a move by the Torys to champion the self-employed.

I mean don't get me wrong an extra £30 a month in our pockets is welcome, but it simply doesn't compensate the increase in inflation we've been subjected to over the last couple of years, and then the employed are getting a slightly larger boost too.

I guess the self-employed must mostly NOT vote conservative, TBH that's something worth exploring, the demographics of it all, must be some research out there somewhere on this!

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11 comments
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(Edited)

£12,000 per year. But is it possible to live on this money in the UK?

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In a word, no. In Britain you pay tax before you start earning a living wage, but you can claim benefits also if you earn below a certain amount too.

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The minor changes they made will not make a massive difference to many. They will still struggle due to increased prices. You have to hope Labour can be less of a shambles.

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The salary of the people here in our country is 100 dollars per month, so you can imagine how difficult the people are living here.

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In my humble opinion, those who put taxes on the self-employed, miss some critical points.

  1. Not all of the self-employed are rich.
  2. Not all of the self-employed are likely to get rich through their trade.
  3. Not all of the self-employed have expenses to count against taxable revenue in accounting terms.
  4. Employed by someone else is not a perfect substitute for being self-employed.
  5. Not all of the self-employed are prone to committing tax fraud. Most of them are ordinary, honest, hard-working people who are literally heroes in fighting to make ends meet in a "dog-eat-dog" business environment.
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In my experience, (this is a generalisation) the self-employed work harder, earn less per unit time and contribute more to the exchequer per person that PAYE

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(Edited)

Smacks of window dressing to me, a rather cheap shot to garner headlines.

It goes counter to the prevailing narrative too, which is puzzling. My mortgage must go up because the BoE must raise rates to cool the economy but the govt do things that loosen money flow. Get on the same page guys !

Yes, lower NI is nice, but I'd rather a mature, reasoned and long term approach to planning and managing the country.

I've no faith in ANY in the political class to deliver anything of value for society, they are all short term thinkers with their eyes 100% on the prize.

P.S been on all sides of the fence in my life, unemployed/black economy in my youth, self-employed high-street business during my " prime" and now corporate world in middle age

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