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NI rate hike for self-employed set to ‘wipe out’ increases in GP funding

GP partners will be forced to pay higher rates of National Insurance from next year onwards, following the announcement of today’s Spring Budget.

In his budget speech, chancellor Philip Hammond announced that the NIC paid by GP partners would increase by 2% in the course of the next two years.

Medical accountants told Pulse this would completely wipe out any uplifts to GP contractual funding, if the Government continued to apply 1% year-on-year public sector pay rises.

The Government’s budget statement said: ‘The main rate of Class 4 National Insurance contributions will increase from 9% to 10% in April 2018 and to 11% in April 2019 to reduce the gap in rates paid by the self-employed and employees, and to reflect the introduction of the new State Pension to which the self-employed have the same access.’

Mr Hammond said the plans for changing NIC rates would raise ‘a net £145m a year for our public services by 2021/22, an average of around 60p a week per self-employed person in this country’.

He added: ‘This change reduces the unfairness in the NICs system and reflects more accurately the current differences in benefits available from the state.’

Medical accountant ‎James Gransby, head of healthcare at MHA MacIntyre Hudson, and and an executive board member of the Association of independent specialist medical accountants (AISMA), said: ‘For GP partners already under financial pressure from high rates of tax and suffering from attacks on their pensions in recent years, the news that their main rate of class 4 national insurance contributions will rise by 2% over the next two years from 9% to 11% will be a bitter pill to swallow’.

He said this was ‘not least because this all but wipes out the promised income increases recently announced in the 2017/18 GP contract review’.

Medical accountant Luke Bennett, from Francis Clark LLP and an AISMA committee member, added: ‘If public sector pay rises continue at 1% then this will be completely cancelled out by NI rises.’