First of all let me declare an interest : I spent the best part of the last 20 years of my working life as a self employed contractor in the IT industry. I’m also a chartered accountant so I was particularly interested in what the Chancellor had to say yesterday about National Insurance contributions.
There’s been a lot of nonsense spouted by various self employed people over yesterday’s announcement, not least of all by one particular blogger – whose blog I’m banned from accessing – that I read this morning (working well, that ban, isn’t it?) who simply doesn’t seem to understand the situation at all, frankly. However, in the interests of fairness, you can read his slant on all this here even if I’m not allowed to! (sic.)
What the Chancellor has done is to abolish Class 2 NICs and incorporate that saving into the Class 4 NIC. The Class 4 NIC has then been increased by 1% this year and a further 1% next year.
The bleat from the people who don’t like this seems to revolve around around their employment rights. The self employed have no employment rights, so the argument is irrelevant. The government provide the NHS and a state pension in return for NI. Here’s an important point : The State Pension has been changed so that self employed people now have the same pension rights as employees. They also have the same access to the NHS, so why should they pay less?
Even after these changes, the self employed still pay a lower NI contribution that employees whilst getting the same access to the NHS and the same pension rights. Employees pay 12% compared to the current Class 4 rate of 9%. Over £43,000 p.a. everyone pays 2%.
The net effect of the changes is that self employed people earning under £28,000 per annum will pay less NI. From £28,000 to £43,000 they will pay the same. Over £43,000 they will pay more.
This seems fair to me. Maternity rights, sick pay and paid holidays are not the responsibility of the government. When I worked as a self employed contractor, I earned more than I would have done as an employee. This was precisely because I had to earn enough to cover unpaid holidays, sickness, gaps between contracts and the like.
There is a class of people in this country and others who believe that things should be given to them as a right and that they shouldn’t have to contribute in order to get them. My fellow blogger’s rant calling the government ‘thieving scum’ and the taxman a ‘blood sucking leech’ shows a fundamentally bad attitude and is typical of the ‘something for nothing’ mentality. I won’t bother to argue the case with him because that would be like trying to teach a pig to sing.
The case for this change is clear. It’s about fairness. If you want the same rights, then you should pay the same contributions towards them. And, at the end of the day, nobody forces you to become self employed. It’s a choice for you as it was for me and I fail to see why there should be a financial incentive funded by employed people for you to do so…