As much as a sixth of a family’s income dependent on one self-employed low-earner could reportedly be lost, due to universal credit changes fusing with the vowed hike in Class 4 NIC.
The potentially significant loss, calculated by the House of Commons library, is at odds with claims that low-earning business soloists will, eventually, be better off due to the NI hike in 2019.
Sounded by the Resolution Foundation, the claims are that the hike will hit £47K freelancers the hardest, but add that “most” freelancers, including low earners, will “be better off.”
But calculations seen by the Guardian and produced by the House of Commons library suggest a £10K freelancer with two children will be worse off due to the NI and UC changes combining.
Such a single parent would lose 16% of their income, the paper said citing the calculations, falling to a slightly less but still swingeing 12% income-loss if they earn £20,000 a year instead.
Cancelling both the changes to Universal Credit (UC) and to National Insurance Contributions (NIC) would boost the £10K freelancer’s family -- and their earnings -- up to a reported £16,457.
The figure is likely to be seized upon by the Labour party, as its leader Jeremy Corbyn has already stated that he will oppose the staged increase in Class 4 NIC from 9p to 11p.
In the hours that followed its announcement, Mr Corbyn said: “We have long argued for a clampdown on bogus self-employment, but today the chancellor seems to have put the burden on self-employed workers instead.”
Chris Leslie MP, a colleague of Labour’s Owen Smith MP
who commissioned the House of Commons library to produce the figures, has said:
“The self-employed do not have the same security [as employees], which is why
we have had the discrepancy in the levels of taxation historically.”