In an attempt to ‘redress unfairness to workers in employment’, the Chancellor announced that when Class 2 National Insurance Contributions (NICs) are abolished in 2018 the main rate of Class 4 NICs for the self-employed will increase by 1% to 10%, with a further 1% increase in April 2019. The Budget also confirmed the reduction in the tax-free dividend allowance for directors, which includes plumbing and heating contractors who operate through a limited company, from £5,000 to £2,000.
John Thompson CEO of APHC, which is the leading trade body for plumbing and heating companies in England and Wales commented:
“The rise in national insurance contributions for the self-employed and the reduction in tax-free dividend allowances for director shareholders will have an impact on the plumbing and heating sector which is predominately made up of self-employed individuals and director shareholders of small limited companies.
“I believe there needs to be more support from the Government for small business owners and more consideration needs to be given to the fact that by running your own business you are taking on more risk than an employed person by not having a guaranteed regular income, paid holiday, sick leave or access to statutory maternity and paternity schemes.
“These measures will result in higher bills for customers and lower incomes for plumbing and heating contractors. It also gives the rogue installer another opportunity to undercut on price.”