Commenting on the cancellation of class 4 NICs, Stephen Herring, Head of Taxation at the Institute of Directors, said:

“The whole National Insurance saga can only be described as chaotic. The irony is that there are good reasons to look at leveling the playing field for employees and the self-employed, as the tax on direct employment is disproportionally higher. However, it would have been much better if, as the IoD had suggested, the Government had waited for the conclusions of its own review of modern employment, and reformed wholesale how different forms of work are taxed. Instead they announced they would raise one tax in isolation, only to cancel it a week later. Successive governments have acknowledged that the growth in self-employment has implications for tax revenues, but not one has wanted to take the political risk of undertaking real long-lasting reform.

“The business community needs to feel that the Government has confidence in its plans for the tax system, and policy isn’t going to chop and change from week to week. Credibility takes a long time to build, but can be lost in a moment. It is now even more important that the November Budget is more far-sighted than the one we have just seen.”

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