NICked again!

Much has been said today about Hammond’s so called U-turn on changes to National Insurance. It is, of course, no such thing.

If you read Hammond’s open letter to MPs he says that increasing benefits for the self employed has to be matched by increased contributions. However, these benefits will not be explained in detail until later this year. What he actually doing is putting things in the right order. You can’t expect people to cough up extra unless they know what they’re getting for it!

He is pressing ahead with the abolition of Class 2 NI. Unsurprisingly nobody is objecting to that and it does mean that the self employed will now pay less – so the inequality between contributions and benefits is now even greater. If I was an employee, I’d be protesting about that bit of unfairness. It just goes to prove that you really can’t please all of the people all of the time…

At the end of the day, the government has listened to the reaction to the proposed changes and modified its approach. The opposition make much of this, saying the government is in disarray and chaos which is, of course, nonsense.

Personally I saw nothing wrong with the changes announced but they were badly explained. And at the end of the day a government that listens and responds to public opinion can’t be a bad thing can it?


7 responses to “NICked again!

  1. Mick Anderson

    As someone who has been genuinely self-employed for 25 years, I can see this one from several different angles.

    There are lots of fake self-employed around now, seemingly especially amongst immigrants. There are so many rules and regulations about opportunity equality but harsh penalties for accidentally employing an illegal immigrant that it’s quite appealing to an employer to not have that responsibility. Our workshop looks like United Nations, and I do wonder about the legality of a few. However, as the biggest suspects are sub-contractors I don’t ask any more questions than I have to.

    Government is avaricious and will always take as much money as possible to either waste on vanity projects or try to buy votes from the gullible and greedy. They only ever “level the playing field” upwards in their favour, never downwards to ours. I don’t care about class 2 NIC being deleted from a cash perspective; I just hope that it simplifies things for my accountant and that it is reflected in the bill,

    I heard some US politician on the radio yesterday complaining about Mr Trumps attempt to set his budget. Listening to him, the only cuts were to the meals-on-wheels service for Veterans, and they were all going to starve to death. Not just our politicians are idiots, then.

    If the Chancellor decided to be more honest about things they would abolish NI and put it all on tax – simplification is a good thing. I might end up slightly poorer through higher taxes, but my accountancy bill would drop to compensate. The real self-employed who buy all their own equipment and have no safety net can claim back their expenses (including things like private heath-care), and the fake self-employed have no advantages because there is nothing to claim back.

    The whole fake self-employment thing was meant to have been dealt with under the IR35 ruling, and the fact that it has become more of a problem shows you just how many loopholes are created when Government insists on adding complications every time.

    I would love to be able to vote for smaller, cheaper, more focussed government, but none of the political classes want to offer us that!

    • They’ve been trying for years to combine tax and NI. When I retired 13 years ago they were trying to get me to go to Lytham to work on the IT system to do just that. Five years later they were still hassling me to work on it.

      It’ll never be up and running and like most government projects badly managed and massively overspent…

  2. Interesting article in the Grauniad this morning which sums this up nicely. Nice to see someone actually pointing out that these changes would have effected the higher paid and not the ordinary working person…

    You don’t get ought for nought, however the scrutiny on waste of public money leaves a lot to be desired. There’s no doubt in my mind that a lot of it gets pissed up the wall

  3. With the greatest respect, I suspect that your citation of the IT project of 13+ years ago as one to combine NI and income tax is – how can I say this diplomatically – bollocks. When Lawson was chancellor he announced that an internal inquiry at the Treasury had definitively ruled out melding NI and income tax. I don’t think the Treasury – or any other part of the government machine – would then try to create an IT system to meld the two when 1. they didn’t need to and 2. they didn’t want to: particularly under a subsequent Labour administration.
    If there was an IT project it would have been one to create a single automated set-up (to go with the creation of the unified HMRC in 2005) under which all taxes could have been administered – not to meld the 2 taxes themselves. HMRC is still working – and failing – on this but it’s not and never was a project to “combine” NI and IT
    In reality, the process of melding the two systems is very straightforward. Actually “melding” doesn’t come into ir. You abolish the NI regime and load the tax “lost” on income tax: massive IT projects shouldn’t be necessary since you’re simply doing away with – not changing – one of the parallel tax regimes (but, there again, the genius of our public servants to create money pits is legendary). Sure there are ramifications concerning entitlements created through the NI system but dealing with these (reducing) entitlements is not that complicated (again I’m probably underestimating the public service element of sheer incompetence).
    Of course, the great disadvantage for the authorities and the politicians is that melding the two taxes would enable the punters to see clearly how much they are taxed. Splitting taxes on income between income tax and NI (and then resplitting NI between employees’ and employers’ “contributions”) obscures the reality. Moreover, it would bring into focus the fact that the incidence of the employer’s contribution is on the employee although the employer signs the cheque.

    • With respect, you might disagree with me and that’s fine but please don’t call me a liar when I’m absolutely certain there are hundreds of contractors out there who also remember that project.

      And since when was any government project as logical and simple as you suggest? I agree they should be but I can think of several examples I’ve worked on over the years…

  4. You’re showing an over-sensitivity here which, unfortunately (cf your disagreement with Longrider) is beginning to spoil your blog. I’m not calling you a liar: I’m saying that there never was and never has been an IT project set up specifically to meld NI and income tax because such a process was specifically ruled out by the Treasury when Lawson was chancellor.
    It might be that one of the consequences of “your” IT project would have made such a melding achievable. However, that was – I reckon – not the purpose of that particular exercise which, as I pointed out, was being undertaken – not coincidentally IMHO – simultaneously with the policy of combining the Inland Revenue and Customs & Excise.
    You might have been told differently but, whoever told you (and, possibly, the other hundreds of IT workers) so, was – again IMHO – talking bollocks or being very economical with the truth. I know the civil service is adept at throwing money away but one of the few things it achieves is the ruthless pursuit of its own interests. Combination of the taxes is not in the interests of the civil service. Accordingly, and tellingly, an internal review carried out by civil servants ruled it out around 30 years ago. Moreover, whenever the suggestion of combining NI and income tax arises in press or parliament the subject is rapidly changed. I can’t prove a negative but the probability that the Treasury off its own bat (ie with no political pressure) would set up a project to create something it steadfastly opposes is in the region of nil to minute.

    • I’m not calling you a liar: I’m saying that there never was and never has been an IT project set up specifically to meld NI and income tax”

      You’re beginning to sound like Longrider! I read the spec for the project when I was asked to work on it. I’m not going into the ins and outs of the details because that would breach the Security Clearance I held for jobs like this. Just suffice it to say that, on this occasion, you are actually wrong. Sorry.