Chancellor faces backlash for tax rise plans on the self-employed

Angry backbenchers denounce Treasury ‘obsession’ with targeting self-employed workers

Chancellor faces backlash for tax rise plans on the self-employed
Credit: Telegraph

The Chancellor’s plans to hike taxes on millions of self-employed workers are set to spark a revolt on the Tory backbenches, risking a repeat of the battle that predecessor Philip Hammond lost.

Several Conservative MPs are opposed to proposals being drawn up to increase taxes on the self-employed to bring them in line with normal employees, The Sunday Telegraph understands.

Rishi Sunak has hinted he will use the Covid support provided to self-employed workers as cover for a tax shake-up. But MPs have blasted the plans dubbed a Treasury “obsession”.

He risks a fresh rebellion in the party only three years after Mr Hammond was forced into an embarrassing U-turn when he was Chancellor. The Treasury declined to comment.

Mr Hammond attempted to raise national insurance contributions for 5m self-employed workers at the 2017 Budget, but quickly backed down after angering MPs. One Tory MP said: “Self-employed workers have had a pretty rough deal and the idea that [Sunak] would now choose to make it even tougher for them seems perverse.

“Most people do not like the Treasury’s continual and institutional obsession with increasing tax on self-employed people.”

The MP said the Chancellor would face a “huge rebellion” if they attempted to introduce the measure at a Budget this year. However, Mr Sunak has cancelled the autumn fiscal event.

Another Conservative backbencher opposed to the plans said the lower national insurance contributions reflects the fact that “if you’re self employed, you are taking slightly more risk”.

They added: “Every business really starts with someone being self-employed and building it from there. If you put people off doing that, then how many businesses will be created?”

Mr Sunak heavily hinted that he would target self-employed workers after providing them with support during the pandemic. He said in March: “If we all want to benefit from state support, we must all pay equally in future.”

The comment was widely interpreted as a reference to the fact self-employed people pay lower rates of national insurance.

Some 2.7m claims were made by self-employed people for the first income support grant, with 2.2m accessing the second. The two tranches cost a total of £13.4bn.

The Chancellor was also criticised on Friday for failing to provide self-employed workers with extra support during local lockdowns.

“Local lockdowns will affect many self-employed people just as much as employees, but as it stands they have much, much less support available to them,” said Andy Chamberlain, director of policy at IPSE.