Launching their manifesto earlier today (11 June), prime minister Rishi Sunak said that the party would reduce national insurance paid by employees by a further 1p next April and then by another 2p by April 2027.
Additionally, the self-employed would no longer have to pay the main rate of national insurance.
Under a Conservative Government, National Insurance would eventually be abolished when ‘financial conditions allow’.
According to the IFS, the two percentage points off the main rate of National Insurance contributions for employees, would be worth approximately £450 a year to someone on average earnings of around £35,000.
However, they would also lose £150 from continued freezes to income tax and National insurance contributions (NICs) thresholds.
The IFS warned that the move to abolish the main rate of self-employed NICs altogether would ‘further entrench’ the tax advantages of self-employment over employment.
Sam Robinson, senior researcher at the Social Market Foundation, agreed. He explained, ‘Cutting National Insurance is a laudable step from a tax design perspective – but only if it leads to a merger with income tax, ensuring that workers are not disadvantaged.
‘Unfortunately, this cut to NICs is not part of a considered reform agenda but funded by magical thinking about the scope for efficiencies in welfare reform. And cutting self-employed NICs by more than employee NICs is a strange decision that will worsen the tax bias against employment.’
Childcare
The manifesto also includes measures already announced by the party, including:
- The 30 hours of ‘free’ childcare for children from nine months old to school-age from working households by September 2025.
- Reform of the Child Maintenance Service.
The Early Years Alliance expressed its disappointment over the Conservatives' failure to mention increased funding for providers to deliver the expanded offer, as did Action for Charity on the party’s lack of action on addressing child poverty.
- Do you know who you are voting for in the next General Election? Share your views with us by emailing: news.nw@markallengroup.com
