Aligning the main NIC rate for the self-employed with the employee class 1 NIC rate has much to commend it, provided there is broad equivalence in benefit entitlement. But this still leaves employer’s NIC which only applies to employees and which tends to discourage businesses from hiring staff and to depress wages. The c£65bn raised each year means reform is not easy. One approach may be to base employer’s NIC on business operating costs rather than employee wages. This would level the playing field across employment and self-employment, address the impact of employer’s NIC on jobs and future-proof exchequer revenue against increasing automation.
