Spring Statement 2022: Rise in dividend tax and National Insurance comes at the “worst possible time for self-employed workers”
IPSE has responded to the Chancellor’s Spring Statement today by saying that measures to tackle the cost-of-living crisis, though welcome, do not go far enough. IPSE has also expressed its disappointment with the Chancellor’s decision to push ahead with the planned rise to National Insurance and Dividend tax, despite calls from the Association to delay.
Andy Chamberlain, Director of Policy at IPSE (the Association of Independent Professionals and the Self-Employed), said: “The Chancellor’s decision, confirmed today, to implement the increases to dividend tax and National Insurance is a blow to those who work for themselves. With inflation reaching its highest level in thirty years and household bills skyrocketing, the hike comes at the worst possible time for self-employed workers. The rise in National Insurance is particularly damaging to those that work via an umbrella company, as these workers are forced to pay the tax twice - as an employer and as an employee. Although the raising of the NI threshold will, to a degree, mitigate the additional burden of this measure, many self-employed taxpayers will still be worse off.
“While we welcome some of the measures announced today, such as the cut to fuel duty by 5p per litre, Rishi Sunak’s announcements today still don’t go far enough for thousands of freelancers that are recovering from the economic uncertainty caused by the pandemic. On welfare, for instance, the Chancellor should have taken the opportunity to suspend the Minimum Income Floor, which would have provided a genuine boost to self-employed Universal Credit claimants who are struggling to make ends meet as a result of the cost-of-living crisis.
Overall, today’s statement will do little to reassure self-employed households, already struggling as a result of existing government policies such as IR35, and now facing historic inflationary pressures.
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