Rishi Sunak warned tax hikes on self-employed will be ‘straw that breaks camel’s back’ | Personal Finance | Finance
Chancellor Sunak hinted last March that he would consider hiking national insurance contributions to even out an “inconsistency” between independent workers and employees. He said: “There is currently an inconsistency in contribution between self-employed and employed.” Various experts have also hinted that Mr Sunak could target self-employed workers to raise funds amid the coronavirus pandemic and resulting lockdown. But such a move would be yet another bitter blow to a group which has already struggled during the pandemic, Director of Policy at The Association of Independent Professionals and the Self-Employed (IPSE), Andy Chamberlain, tells Express.co.uk.
Mr Chamberlain warned the Chancellor that a tax increase could be the “straw that breaks the camel’s back”.
He said: “People are in an extremely fragile state, and if they have managed to cling on now, the last thing they are going to need is an increased tax burden.
“If we care about our employment rate, if we care about people’s business and if we care about the economy we should not be considering tax rises right now.”
The speculation comes as millions of self-employed people in the UK remain excluded from SEISS.
The fourth grant has been confirmed, and will cover February to April. But details such as its cap remain unclear.
Applications for SEISS 3 have now closed, which is worth 80 percent of average monthly trading profits, capped at £7,500 in total.
Mr Chamberlain told this website that Mr Sunak should ensure support covers at least the same amount, as a reduction could prove difficult for self-employed workers.
He said: “SEISS 1 and 3 were 80 percent and SEISS 2 was 70 percent. We’d like to see this remaining at 80 percent.
“We can’t see any justification to make SEISS 4 any less generous – we are in a pandemic, we are still in lockdown and people are still struggling.”
Strict rules have meant that many were unable to access the support.
READ MORE: Rishi Sunak told to change SEISS 4 so more can access it
If you didn’t file a tax return for 2018/2019, you are currently ineligible for SEISS.
Mr Chamberlain tells Express.co.uk, however, that these people will have filed a tax return since then, so should be included in the fourth grant.
He added: “We are calling on the Government to include these people in the next round of SEISS, because they would have done a tax return by now.
“Because they have done that, HMRC has the information it needs in order to process those grant payments.”
Mr Chamberlain adds that, overall, the support provided to self-employed people during the pandemic has left many feeling disappointed.
Rishi Sunak warned against SEISS 4 reduction [INSIGHT]
Sunak backlash as self-employed to ‘pay price’ with tax hikes [ANALYSIS]
Rishi Sunak condemned over self-employed tax hike plan [INSIGHT]
He said while some have received generous support, others being excluded has led to widespread frustration.
The IPSE head added: “The problem is, because of the arbitrary nature of the criteria, many have not been able to access SEISS.
“What we are seeing is wildly different experiences – Person A has been well looked after while Person B has not been very well looked after at all.”
UK borrowing is expected to hit £400billion for the 2020-21 financial year, marking the country’s highest budget deficit outside wartime.
Between August 17 and October 31, 2020, HMRC received 2.3 million claims for the SEISS from a total potentially eligible population of 3.4 million.
These claims totalled £5.9billion with an average award of £2,500 per claimant.