The announcement by Chancellor of the Exchequer, Philip Hammond, that National Insurance Contributions (NIC) will rise for the self-employed by 1% to 10% from April next year and then then rise again to 11% in 2019, has been described as bad news for family farms and those working in the agricultural industry, by the Farmers’ Union of Wales (FUW).
The increase, so the FUW says, will hit the low and middle earning self-employed and as the majority of Welsh family farms are classed as such, the measure will do little to support rural businesses.
There are currently 2 types of National Insurance if you’re self-employed:
Class 2 if your profits are £5,965 or more a year
Class 4 if your profits are £8,060 or more a year
Those self-employed currently pay 9% on profits between £8,060 and £43,000 and 2% on profits over £43,000. From next year those making a profit of over £43,000 will still pay 2%.
FUW Managing Director Alan Davies responded to the Spring Budget saying: “Philip Hammond claims that these increases make the system fairer, but I can’t see how increasing tax for those who are making a profit of less than £43,000 is fair. Why is it that tax is being increased for those hard working individuals, some of whom only make a profit just over £8,000, whilst at the same time corporation tax is falling?
“This increase will hit farmers across the UK badly, and that at a time when they are already having to cope with an increase in business rates, which of course is devolved to Wales, but the increase in NIC is not. Add to that the uncertainty around future agricultural support and those making a living from agriculture are not being put in the most favourable financial conditions.”
With regards to business rates, the FUW welcomed the measures the Chancellor announced to help those businesses affected in England and calls on the Welsh Government to use some of the extra £200 million allocated to Wales to offer further support to those businesses, such as livestock markets, who would see their rates spike by 100%.