Contractors are this week trying to get their heads around the 2017 Budget, and sadly in many cases, the current government has not been kind to those who work for themselves.

Despite many urging Chancellor Philip Hammond to be considerate of this growing part of the UK labour market in the build up to his first budget announcement, it seems that little to no mercy has been shown.

Among the worst news for those working on a self-employed basis, including PSCs, was a hike from 9% to 10% for their rate of Class 4 NICs from next April, before rising again to 11% in 2019.

This will apply to any sole trader earning more than £16,250 a year, and represents a significant swelling in the amount of tax these workers will have to pay. The tax rise will reportedly make the government around £145million.

Other particularly painful news for contractors includes a cut to the tax-free dividend allowance. This £3,000 lowering means contractors will be £225 worse-off a year if their dividends are covered by the basic rate. That will be significant more if working under the higher rate – around £975 – and even more at £1,143 worse-off under the additional rate.

In slightly more positive news for contractors, the ‘Making Tax Digital’ initiative has been put on the backburner. Self-employed people will now not be required to start filing at least quarterly digital tax updates until April 2018 if they have profits chargeable to income tax and pay Class 4 NICs and their turnovers are in excess of the VAT threshold. That will be even later, in April 2019, if they have profits chargeable to Income Tax and pay Class 4 NICs and their turnovers are below the VAT threshold or if they are registered for and pay VAT. Quarterly digital tax updates will not be required until April 2020 for those who pay corporation tax.

This means that self-employed workers and PSC contractors will have a further year to prepare for the shift to digital taxation.

Many industry figures have expressed their dismay with 2017 budget, citing the hypocrisy of the changes compared to previous manifestos issued by the Conservative party.

“The self-employed are the engine of the UK economy,” said Andy Chamberlain, deputy director of policy at IPSE.They help businesses be more innovative and to manage peaks and troughs in demand. If the Chancellor wants to know what our labour market would be like without them, he need only look across the Channel to France where the impacts of an inflexible labour market are plain to see.”

The budget has been called punitive on the self-employed in some quarters, as it seems the government has decided that those working for themselves are somehow gaining in terms of their tax payments.

This has been vociferously argued against by the contractor and wider self-employed community as a whole, but has ostensibly fallen on deaf ears.

“We are very concerned that the Chancellor made clear that preliminary thoughts from the review suggest that the main drive for individuals to incorporate as companies is to maximise tax savings,” said Samantha Hurley, Operations Director at The Association of Staffing Companies (APSCo). “In the professional sector this is simply not the case – these are bona fide business to business relationships where the individual has no guarantee of continuity of assignments, has genuine business risk and liability – and none of the benefits enjoyed by permanent employees.”

While the dust settles then, there’s no doubt that Hammond has done little to enamour a section of the UK labour market which has been flourishing since 2000.

Chamberlain added: “We need the self-employed and we are lucky to have them. It would be nice if that message were reflected in the next Budget in the Autumn.”