Chancellor Philip Hammond's declarations of a sudden increase of the Class 4 National Insurance contributions (NIC) from 9-11%; and a dividend cut in allowance from £5000 to £2000, announced during the Spring budget has deeply affected the self employed, contractors and single person businesses.
The Asian community (that forms a significant percentage of this section) feel betrayed, as many had voted for the Conservative party in the last General Elections.
It is believed that this change will lead to an increase in expenses by 16% among the middle class families. The devastated business owners who neither have employment rights nor the security enjoyed by the employed, expressed why they feel they do not get enough support from the government.
Many of them have called it a further step by the Government to penalise those who are taking risks and starting businesses, often giving up their regular pay cheques to take a chance at creating something great.
Kiran D Patel BA (Hons) FCA from Albury Associates told the Asian Voice, “It is very difficult to assess the size of the industry as there are many small owner-managed businesses in the country. However, one can comfortably state that they are likely to comprise of the largest sector of “entrepreneurs” and are likely to have the largest impact as a result of the budget proposals.
“Owner managed businesses and business owners are built to adapt to most circumstances and regulations, however, there will be some fall-out as a result of a loss in margins and profitability. This can only go towards putting an extra burden on the state to support these fall-outs.
“By introducing tax rises that predominantly affect certain sectors of the economy, the government may have inadvertently triggered an enlargement of the black economy which may eventually resulting a reduction in tax collections.”
Lucy-Rose Walker, CEO, Entrepreneurial Spark said, “Removing the few remaining incentives of being self-employed is counter-intuitive and will lead to fewer enterprises and consequently fewer jobs.”
Ed Molyneux, CEO and co-founder of FreeAgent – who introduced the award-winning cloud accounting software for freelancers, micro-businesses and their accountants – said, “We are worried that the government increasingly sees the self-employed as an easy target. 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.”
Labour party said it would oppose the policy, with the shadow chancellor, John McDonnell, saying: “Labour will oppose the £2bn Tory tax on self-employed lower-middle earners.” People have also suggested a petition, but it has been established that their confidence in the government is shaken.