Change in national insurance contributions to hit Havering's entrepreneurs hard
PUBLISHED: 10:45 10 March 2017 | UPDATED: 11:23 10 March 2017
An accountancy firm has said announcements made by chancellor Philip Hammond in Wednesday's budget could hit business owners and the self-employed hard.
National insurance contributions for the self-employed will rise from nine per cent to 10pc from April next year and 11pc from April 2019.
This means self-employed workers could pay an average of £240 a year more and business owners who pay themselves in the form of dividends rather than a salary, will see their tax-free allowance reduced from £5,000 to £2,000 next year.
David Belbin, a managing partner at Clemence Hoar Cummings, Como Street, Romford, said: “Self-employed individuals, entrepreneurs and business owners are set to take a real hit, but with little by way of a quid pro quo in terms of employment rights or benefits from the government.
Chairman of the Havering Chamber of Commerce, Barry Hicks added: “I see what the government are trying to do.
“It’s trying to equalise it [with employee contributions] but there’s criticism that it didn’t go for the bigger businesses.”
Companies such as Google, Amazon and Starbucks have been known to make large profits but pay little in corporation tax to the UK economy.
In 2012, Starbucks – which has branches across the borough – made £400million in profit but paid no corporation tax.
Amazon, which reportedly had sales in the UK of £3.35bn in 2011, reported a “tax expense” of £1.8m.
And Google’s UK unit paid £6m to the treasury in 2011 despite a UK turnover of £395m.
Plans have since been put in place to minimise multinational tax avoidance.
“On the face of it, it does seem unfair,” continued Mr Hicks.
“But perhaps with Brexit there’s a possibility the government is keeping the cards close to its chest.
“It’s a very fine balance. What seems bad in the first place might not seem bad later on.”
But Mr Belbin continued: “It was disappointing not to see more done to protect the businesses that have been hardest hit by revaluation.
“Some businesses with town centre premises are still set to lose out significantly and the chancellor should have looked again at this.”