The Chancellor called the Class 2 contributions – which were abolished by George Osborne in 2016 - ‘regressive and outdated’ and said the system must ‘better reflect the current differences in state benefits’.
He added:
“This change reduces the unfairness in the NICs system and reflects more accurately the current differences in benefits available from the state.”
Responses from the mortgage industry have made clear that the move could have negative outcomes for self-employed borrowers, with Precise Mortgages’ Alan Cleary said the move had done ‘nothing to help’ workers who were already at a disadvantage to their employed peers.
He continued:
“This attack on the growing self-employed population fails to recognise that self-employed workers do not enjoy the same benefits as the employed, such as sick pay and holiday pay.
“One of the impacts could be that self-employed people may not be able to borrow as much money to buy their home as they will have less net income.
Nigel Payne, managing director of TFC Homeloans, agreed, noting that:
"We already know that the self-employed are not adequately served by the mainstream mortgage market, facing challenges in verifying their income and proving affordability.
"The measures announced today could exacerbate these challenges, and make it even more important that self-employed borrowers can access specialist mortgage funding as they become increasingly distanced from high street lenders.”
