SELF-EMPLOYED FACE TAX HIKE IN THE BUDGET

The self-employed face being hit with a tax rise in Wednesday's Budget as the Chancellor looks to increase the National Insurance (NI) they pay.

Using a recent report by the Office of Tax Simplification (OTS) on possible alignment of income tax and NI, George Osborne will take the opportunity to start with aligning the rates, claims top 40 accountants Bishop Fleming.

Self-employed workers currently pay 9% NIC on their profits, whilst employees and directors pay 12%. The Chancellor could easily close the gap with a 3% rise on the self-employed to help cut the Budget deficit.

Bishop Fleming partner, Andrew Browne commented: "The Chancellor may use the OTS to justify this tax rise."

Whilst there is a tax lock on any increases in NI up to 2020, George Osborne did not include the NI that the self-employed pay in that lock.

Mr Browne explained: "Class 1 NI rates are locked for this Parliament, but Class 4 paid by the self-employed were left out of the equation; quite deliberately in my view. I predict that Osborne will increase Class 4 to be in line with employees and directors as a simple tax-raising measure."

The Bishop Fleming partner added: "A 3% rise in NI is something the Chancellor can get away with; he will sell it on the basis of tax simplification - as rates will then be the same - but it does not simplify anything; it just raises more tax."

According to Mr Browne, Osborne will also say that in return for paying more in NI, self-employed workers will be given access to the same welfare benefits as employees. However, Mr Browne remarked: "In surveys that have been carried out in the past on the self-employed it was made clear that the majority did not want these extra benefits. So the Chancellor is going to sell them something they don't actually want."

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PHOTOGRAPH: Andrew Browne, Tax Partner, Bishop Fleming 

FURTHER INFORMATION:

• Andrew Browne:abrowne@bishopfleming.co.ukor 01392 448800

• Julian Cramp:jcramp@bishopfleming.co.ukor 01392 448800

NOTES TO EDITOR:

• Bishop Fleming is a UK Top 40 firm of accountants with offices in Worcester, Bristol, Bath, Exeter, Torquay, Plymouth and Truro.

• Bishop Fleming has been ranked 49^thin The Sunday Times 100 Best Companies to Work For.

• Bishop Fleming was shortlisted for "Top 50 Tax Team of the Year" in the British Accountancy Awards 2015.

• Bishop Fleming was highly commended for the "Mid-Tier firm of the Year" in the British Accountancy Awards 2015.

• Bishop Fleming won accreditation as an "Outstanding Investor in Clients" (Investors in Customers) in 2015.

• Bishop Fleming was listed as one of the 4 "Best Employers" by Accountancy Age in 2013.

• Bishop Fleming was the first UK accountancy firm to win "Investors in People" accreditation (and has secured re-accreditation ever since).

• Bishop Fleming is a member of Kreston International, a network of independent accounting firms in more than 100 countries.

• The firm focuses on serving and championing owner managed businesses and has sector teams specialising in:

• Academy Schools

• Charities, Schools, and not-for-profit

• Healthcare including Care Homes, Dentists and doctors

• Hotels, Leisure & Tourism

• Manufacturing Technology and Innovation

• Renewable energy

• Property & Construction

• Media & Creative

• Professional Practices.

• Bishop Fleming is unusual in having:

• A full-service payroll operation

• An independent financial advisory service (IFA)

• Tax Partners with international experience

• A VAT Director and a Technical Tax Manager.