A recent report by the Institute for Fiscal Studies (IFS) argued that the tax system, and especially the different NICs rates, tend to favour self-employment while discouraging employment.
Historically, self-employed people have paid lower NICs because they were eligible for fewer state benefits, but the IFS said this is no longer the case and there is now “no reason” for this disparity to exist.
The financial cost of COVID-19 may provide further impetus for reform, as Chancellor Rishi Sunak hinted when he first announced the self-employed income support scheme back in March 2020.
That said, the Conservative Party’s 2019 manifesto included a pledge not to increase VAT, income tax or NI, so a major hike in NI seems unlikely for now.
Read our article here to find out the different types of national insurance and how this works for sole traders, company directors and those with multiple jobs.
You can check your national insurance record online with HMRC here and also talk to us.