The stark warning comes as reports suggest the Chancellor could hike national insurance contributions on the self-employed to pay for the pandemic Mr Sunak is looking for ways to recoup funds from taxpayers to pay for the roughly £280billion of Government spending used to provide support during the COVID-19 crisis, including on various schemes designed to keep people in work. But many self-employed business owners and contractors have been excluded from the Self Employed Income Support Scheme (SEISS) because of strict rules. A fourth SEISS grant will be implemented, covering the period from February until April 2021.
George Bull of RSM warned that Mr Sunak will target self-employed national insurance contributions.
He said last March, at the start of the pandemic: “The Chancellor makes it clear beyond doubt that he is now thinking of applying the same NIC regime to employees, the self-employed and other workers.
“It looks as though it will come at the price of higher future NIC contributions.”
Last March, when Mr Sunak announced his initial support scheme for self-employed workers – he also hinted at tax rises.
He said: “There is currently an inconsistency in contribution between self-employed and employed.”
Many in the Conservative Party were furious at Chancellor Sunak when claims of the measure were rife.
He was warned that raising tax on the self-employed could spark a rebellion amongst his colleagues.
One Tory MP told the Sunday Telegraph: “Self-employed workers have had a pretty rough deal and the idea that Sunak would now choose to make it even tougher for them seems perverse.
“Most people do not like the Treasury’s continual and institutional obsession with increasing tax on self-employed people.”
The MP also warned of a “huge rebellion” if the plans were put in place and added that “most people do not like the Treasury’s continual and institutional obsession with increasing tax on self-employed people”.
Former Chancellor Philip Hammond attempted to raise national insurance deductions on the self-employed in 2017, but faced significant backlash.
Mr Hammond tried to defend the policy, but admitted that aspects of it were not “in the spirit” of the Tory manifesto.
He added: “The Government continues to believe that addressing this unfairness is the right approach.
“However, since the budget, parliamentary colleagues and others have questioned whether the increase in class 4 contributions is compatible with the tax lock commitments made in our 2015 manifesto.”
The Government at the time eventually ditched the idea.
UK borrowing is expected to hit £400billion for the 2020-21 financial year, marking the country’s highest budget deficit outside wartime.
The furlough scheme, or the job retention scheme has cost the UK economy £82 billion.
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Data from HMRC shows the number of furloughed employees increased by 1.3 million at the start of November, peaking at 4.1 million.
It dropped to 3.9 million by the end of the month, and estimates for December show it fell slightly to 3.8 million by the end of 2020.
But Tax Research UK’s Richard Murphy told Express.co.uk that tax increases could lead to a “depression.”
He said: “At first, Rishi Sunak completely underestimated what was going to happen, it was a complete disaster, because he hadn’t realised how disastrous coronavirus was going to be.
“But he was back a week later with the furlough scheme, it was smart, quick, some people lost out when they shouldn’t have done.
“Now Sunak’s obsession with debt is kicking in again.
“If he opts for austerity and tax hikes, then frankly we are heading for depression rather than a recession.”