The government has scrapped its plans to abolish class two National Insurance Contributions in “yet another betrayal of the self-employed”, it has been said.

In a written statement published yesterday, 6 September, The Exchequer Secretary to the Treasury Robert Jenrick said that the change, first intended to simplify the tax system, may now have “unintended consequences” for low earning self-employed workers.

The policy delayed from being implemented in November 2017, but after “engaging with interested parties” found that the lowest earners would have seen their voluntary payment, needed to maintain access to the state pension, “rise substantially”.

“Having listened to those likely to be affected by this change we have concluded that it would not be right to proceed during this parliament, given the negative impacts it could have on some of the lowest earning in our society,” Jenrick wrote.

“Furthermore, it has become clear that, to the extent that the government could address these concerns, the options identified introduce greater complexity to the tax system, undermining the original objective of the policy.”

Quilter head of retirement Jon Greer has describe The Chancellor of the Exchequer’s u-turn as “sensible”, but feels the government need to do much more about the self-employed savings conundrum.

“Figures from the Office of National Statistics show that 45 per cent of self-employed workers aged between 35 and 55 have no private pension. A savings policy for the self-employed needs to acknowledge that there are legitimate reasons why some self-employed people do not engage in pensions, particularly those on lower incomes.”

Responding to the government decision, Labour Shadow Chancellor, John McDonnell, said: “This is yet another betrayal of the self-employed.

“These people are the engine of the economy and have been let down again, while giant corporations have seen their tax bills slashed. Few will ever trust Philip Hammond or the Tories again.”

The government added that it will continue to review methods of simplifying the tax system for the self-employed.

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