The Association of Independent Professionals and the Self-Employed (IPSE) has called on the government to delay planned increases in dividend taxes and National Insurance contributions, amid huge increases in household bills.
National Insurance contributions and the dividend tax rate are set to increase by 1.25 per cent from April 2022, as part of the government’s new Health and Social Care Levy, designed to provide more funding for the NHS.
However, with the self-employed sector already suffering from numerous factors, including the impact of IR35, the COVID-19 pandemic, inflation and massive increases in household energy bills, the IPSE has said that the tax hikes will further damage the sector and its ability to recover from recent challenges. They have therefore requested the government delay the increases.
IPSE Director of Policy Andy Chamberlain said: “With the average household bill set to rise by 54 per cent from April, we at IPSE believe that now is not the time to increase taxes on thousands of self-employed workers. The energy crisis is likely to hit freelancers especially as they typically work from home and therefore use more energy to heat their homes than office-based workers.”
“Working for yourself is already challenging. Any additional costs could severely damage the sector’s ability to recover. While self-employment was one of the most dynamic parts of the economy pre-COVID, the sudden loss of work during the lockdowns has scarred the sector and made it more difficult for contractors to make a living.”
“The rise in National Insurance is particularly damaging to those that work at an umbrella company, as self-employed workers are forced to pay the tax twice – as an employer and as an employee. We hope that any delay to the planned increase in National Insurance will give HMRC and the Treasury time to solve this pressing issue.”
