The NI increase will become a burden to freelances

Further to Design Business (DW 24 April), for employees and employers there was next to nothing in the Budget to compensate for the combination of the freezing of personal allowances and the increases in National Insurance.

Design businesses with employee costs as their primary outgoing will see their net profits further reduce in line with increased salary costs.

This will not encourage a marginal decision in favour of an increased head count, but would, instead, encourage the use of freelances, thus transferring the National Insurance burden on to the freelance.

And for companies operating at break even it could trigger a decision to reduce head count.

However, on the plus side, the increase was no more than was previously announced, and although there was some marginal widening of the scope in relation to share options, there was no hike to pay for the Iraq War.

You might argue that the Tax Credit system, in particular, Working Families Tax Credit, compensate for the increase, but the sheer complexity is a major disincentive to make a claim.

Amanda Merron

Partner

Willott Kingston Smith

London W1