Widely reported as one of its more controversial elements, the 2017 Spring Budget earlier this year delivered the news of a hike in the National Insurance rate for the self-employed.
The plan was to ultimately increase the rate from 9% to 11% by 2019 on profits over £8,060 – meaning a self-employed person earning over this threshold would have to shell out an extra £240 a year in taxes, on average.
An unexpected U-turn
A week after the announcement, however, and following a serious backlash from Tory backbenchers and the UK's business community, including the Federation of Small Businesses, the Government decided to revise its plans. In a Commons statement to MPs, Chancellor Philip Hammond announced that: "There will be no increases to National Insurance Rates in this Parliament."
It's undoubtedly a stroke of luck for SMEs and entrepreneurs that the Chancellor had a change of heart about this issue, as the increase would have had a negative impact on small businesses. We had a narrow escape this time, but it just goes to show the importance of staying on top of these kind of changes so you can be adequately prepared.
The Government's influence on your business
We all know how much work it takes to get a successful business off the ground. And intervention by the Government can swing either way, in terms of either nurturing the development of SMEs or hindering their growth. It basically all comes down to the governing party, and what that party's attitude is towards small businesses.
The reversal on National Insurance rates is obviously fantastic news for SMEs, but the whole episode also serves to highlight just how crucial it is for small business owners to be aware of any external changes to laws or policies that could affect the day-to-day running of your company. This is especially true when your business is either just starting out or is in a vulnerable stage of growth, and is therefore more susceptible to being affected by factors outside your control.
Unforeseen circumstances
This type of policy change serves as one very clear example of an external factor that could affect your business, without you having any control over its direction. It's not the only type of unforeseen circumstance that could strike, though.
There are all sorts of issues that you could be faced with, no matter how well prepared you are – we're all human and the odd mistake is sadly inevitable. Stay protected with professional indemnity insurance to keep your business safe.
