Take-home pay for 800,000 freelancers may be cut back

Incomes could be hit for up to 800,000 freelance workers if the government decides today to increase employers’ national insurance contributions, say tax experts. Chancellor Rachel Reeves is understood to be considering the move as part of her plans to raise money to bail out Britain’s battered public services.

- HOWARD MUSTOE

Employers pay the tax at a rate of 13.8 per cent on income above £9,100 a year. Labour has claimed that the Budget will not hit working people, but tax experts say that certain freelancers could end up paying the bill. Those who work for so-called umbrella companies could lose out, said Rebecca Seeley Harris, an employment status expert and founder of ReLegal Consulting.

Umbrella companies employ contractors for temporary work, often being paid via recruitment agencies. But workers using them may find that they are being paid a flat rate gross of all tax. This means that if employers’ national insurance rises, it will eat into their take-home pay, she said.