Steven Cameron, Aegon Pensions Director comments: “While the u-turn is likely to be welcomed by many self-employed people, the policy has put the spotlight on the issue of NI and the rights and benefits of those working in the gig economy. We hope that the government will look more closely at what can be done to close disparities between the employed and the self-employed. Within pensions, we need to find a solution equivalent to auto-enrolment, using nudges for the self-employed to halt the growing retirement income divide we’ll otherwise face between them and their employed peers when they come to retire. Delaying the increase allows more time for the government to come up with a pension solution for the self-employed, which could include rebating the increase in NI into a private funded pension of the self-employed individual’s choice.”
Commenting on the Chancellor's decision to scrap the recently announced increase in NI contributions for the self-employed, Steve Webb, Director of Policy at Royal London said: "It is time for an end to the roller-coaster of policy making from the Treasury. First we had a dividend tax break introduced and slashed a year later. Then we had a National Insurance rise for the self-employed reversed within days of being announced. What is needed is a long-term strategy for tax, not a serious of short-term announcements. Now that the Chancellor has committed to leave NICs for the self-employed alone, we also need a long-term commitment to stop meddling with pension tax relief. That would provide savers with the certainty that they urgently need. We also need a strategy to tackle the pensions saving crisis amongst the self-employed which remains unaddressed".
Sean McCann, chartered financial planner at NFU Mutual, said: “The true cost of this decision may still be borne by the self-employed. It’s clear that the Chancellor will look to recoup money from other sources and many tax reliefs will be in his sights. The likes of Business Property Relief – used by many sole traders and partnerships to hand down family businesses free of inheritance tax – could now be under threat and any sense of relief among self-employed people could become a sense of foreboding once the autumn Budget draws near.”
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