Northern Ireland and UK | Tax Increases Announced for the Self Employed

Artists and arts sector freelancers in Northern Ireland and the UK came under attack again today with the announcement in the Spring Budget that Class 4 National Insurance contributions for Self Employed will rise from 9 to 10% in April 2017.

This increase will then rise to 11% in April 2018 and 12% in 2019.

Class 4 National insurance contributions are currently payable on all income over £8,060.

Currently the self employed also pay Class 2 contributions of £145 per year (£2.80 per week), although these are due to be abolished in April 2018.

The BBC are reporting that because Class 2 contributions are being abolished in 2018, “only the self-employed with profits over £16,250 will have to pay more as a result of these changes”.

This, however, fails to mention that when George Osborne announced that Class 2 contributions were being abolished it he said it would “put ‘rocket boosters on the back of enterprise” and “allow millions of self-employed individuals to keep more of their money and invest it back into growing their business”.

Now it seems it was just a way to allow Class 4 contributions to be increased and none of the intended benefits will be felt. The BBC also fail to account for 2017, in which the self employed will still be paying Class 2 contributions as well as the increased Class 4 contributions.

Chancellor of the Exchequer, Philip Hammond, says that the increases are designed to bring parity to taxes paid by the employed and self employed. However, in 2017 at least, the self employed will continue pay National Insurance contributions at a lower income level (£5965) than the employed (£8060).

What the Chancellor also failed to mention, was that benefits such as holiday pay, sick pay, and maternity pay are not available to the self employed, job security is also more fragile and contracts are often temporary and short term.

As well as artists themselves, much of the arts sector is staffed by freelancers. Artists and arts sector freelancers are amongst the lowest paid workers in our society, and even small increases to taxes can have a huge impact to earnings and quality of life.

The long term impact on squeezing the lowest paid workers cannot be fully understood but it is unlikely that it will result in a rise in the number of skilled workers joining the arts sector.

Visual Artists Ireland will continue to campaign in Northern Ireland for tax exemption on creative works, and for raising the threshold above which Class 4 National Insurance contributions are paid, but at the moment, with no government at Stormont to listen and a government in Westminster that doesn’t want to listen, it seems like the poverty gap will continue to widen and the arts sector will continue to shrink.

– Rob Hilken
VAI Northern Ireland Manager
T: +44 (0)28 9587 0361

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