Business groups react to "tax grab" on self-employed

Philip Hammond's first Spring Budget has had a mixed reception from business leaders. While business rate relief has been welcomed, increases in National Insurance for the self-employed have been widely panned.

Mike Cherry, national chairman at the Federation of Small Businesses (FSB), described the Class 4 National Insurance rise as "a £1 billion tax hike on those who set themselves up in business".

He said it "undermines the Government's own mission for the UK to be the best place to start and grow a business, and it drives up the cost of doing business … Increasing this tax burden, effectively funded by a reduction in corporation tax over the same period, is the wrong way to go."

Jason Kitcat, head of policy and public affairs at Crunch Accounting, welcomed the prospect of increased parental support for the self-employed, but said "the UK's self-employed and small business owners would be more open to discussing hikes in National Insurance and cuts to dividend tax allowances if they had been explicitly presented alongside additional rights and protections".

Nigel Green, founder and chief executive of deVere Group, said: "This tax grab will hit millions of Britain's hardworking entrepreneurs. This group of self-reliant people are the lifeblood of the economy. Hiking taxes on the self-employed punishes ambition and undermines aspiration to get on in life."

Ed Molyneux, ceo and co-founder of FreeAgent, said: "It is very unfair to position freelancers and contractors as not being on a level playing field with those who are employed. These business owners have none of the employment rights or the security that employed workers do, and there must be some recognition for that - unless they want to cripple this very important and growing part of the UK economy."

Commenting on the Budget as a whole, Dr Adam Marshall, director general of the British Chambers of Commerce (BCC), said: "Businesses had been advised to expect minimal change, rather than a blockbuster Budget, and Philip Hammond did not disappoint. Short-term support for firms hardest-hit by business rates rises will be welcomed, along with commitments to technical education, digital connectivity, easier R&D tax credits, and a one-year delay to digital tax reporting for the very smallest firms. Conversely, hikes to dividend taxes and national insurance for the self-employed will be viewed far less positively by entrepreneurs."

Marshall welcomed the announcement about business rate relief, but warned that "measures that mitigate the short-term impact of business rate rises are little more than a sticking plaster. The radical changes needed to improve the broken business rates system will have to wait for another day. The campaign for radical reform … continues."

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