Abolish Self-Employed National Insurance
Conservative · what the evidence says
An independent, source-checked look at Conservative’s policy “Abolish Self-Employed National Insurance” — what it would actually do across the things that affect your life. Every claim below quotes the source behind it. How this works.
Tax & the money you keep — Helps
moderate · moderate confidence
Self-employed workers earning above the profits threshold would keep significantly more of their income — around £1,350 a year for someone earning £35,000 — but the benefit only arrives fully by 2029 and lower earners below £12,570 see no gain at all.
The evidence
- The policy pledges to abolish the main rate of self-employed National Insurance entirely by the end of the next Parliament, building on Class 2 abolition. — conservatives.com (manifesto) — “The Conservative Party pledges to abolish the main rate of self-employed National Insurance entirely by the end of the next Parliament, building on the abolition of Class 2 contributions from April this year.”
- Class 4 NICs currently apply at the main rate on profits between £12,570 and £50,270, with 2% above that. — vertexaisearch.cloud.google.com (media) — “This applies to profits between £12,570 and £50,270, with a 2% rate on profits above £50,270.”
- Self-employed individuals with profits below £12,570 already do not pay Class 4 NICs and would not directly benefit. — truemanbrown.co.uk (media) — “Self-employed individuals with profits below the Lower Profits Limit (e.g., £12,570 for 2025/26) already do not pay Class 4 NICs, so they would not directly benefit from its abolition.”
- An average self-employed person earning £28,000 is projected to save over £1,500 a year by April 2029 combining this with previous cuts. — castlepointconservatives.com (media) — “An average self-employed person earning £28,000 is projected to save over £1,500 a year by April 2029 when combining this with previous tax cuts.”
- A self-employed worker on £35,000 would gain £1,350 from abolition of the main rate, but their total tax bill in 2028-29 would be only £1,230 lower relative to today due to frozen thresholds. — uk.finance.yahoo.com (media) — “The IFS estimates that while a self-employed worker on £35,000 would gain £1,350 from the abolition of the main rate, their total tax bill in 2028-29 would be £1,230 lower relative to today, reflecting the offsetting eff…”
- The full abolition is estimated to benefit approximately 4 million self-employed people, covering 93% of self-employed individuals. — castlepointconservatives.com (media) — “the full abolition of the main rate of Class 4 NICs will benefit approximately 4 million self-employed people, effectively taking 93% of self-employed individuals out of paying Class 4 NICs.”
- Class 4 NICs do not contribute to state pension or benefit entitlements, so abolition would not reduce pension rights. — uk.finance.yahoo.com (media) — “Class 4 NICs do not currently contribute to state pension or benefit entitlements; they are purely a tax on profits.”
Biggest unknown: Whether frozen thresholds or compensating tax rises elsewhere offset the headline saving for many workers over the policy's life.
Our reading: This policy directly reduces the tax burden on self-employed workers with profits above £12,570 — a clear O11 improvement. The mechanism is concrete: a staged rate reduction from 6% to 0% over five years, with full abolition by April 2029. The IFS-cited figure of £1,350 saved for a worker on £35,000 is the most credible magnitude estimate; however, the same IFS analysis notes that frozen thresholds offset part of this gain, so the net improvement in take-home pay is real but somewhat smaller than the headline NI saving implies. The distributional picture is uneven: roughly 7% of self-employed individuals (those below £12,570 profits) see no benefit at all from Class 4 abolition. For those who do benefit, the gain is material and sustained. State pension entitlement is protected since Class 4 was never a contributory vehicle. The magnitude is rated moderate rather than major because frozen thresholds erode some of the headline gain, and the benefit is concentrated among workers with mid-to-high self-employment profits. The time horizon is long-term since full abolition only arrives in April 2029. Confidence is moderate because the key uncertainty is whether compensating fiscal measures (other tax rises or spending cuts) could offset the household benefit — the policy as stated does not address funding, and critics note the revenue cost of around £2.28bn by 2028-29.
Public finances & the next generation — Hurts
moderate · moderate confidence
Abolishing self-employed National Insurance would remove roughly £2.3 billion a year in tax revenue by 2028-29 with no identified replacement funding, worsening the public finances. The key uncertainty is whether the government would offset the cost through spending cuts or other tax rises.
The evidence
- The policy pledges to abolish the main rate of self-employed National Insurance entirely by the end of the next Parliament. — conservatives.com (manifesto) — “The Conservative Party pledges to abolish the main rate of self-employed National Insurance entirely by the end of the next Parliament”
- Labour estimated that reducing self-employed NIC from 6% to 0% could cost £2.28 billion in 2028/29. — pa.media (media) — “reducing self-employed NIC from 6% to 0% could cost £2.28 billion in the 2028/29 financial year”
- The OBR certified that even the initial Class 2 abolition and 1p Class 4 cut cost around £725 million in 2024-25. — gov.uk (media) — “the initial Class 2 abolition alone would lead to foregone revenue of £380 million in 2024-25, rising to £370 million by 2028-29, and the 1p Class 4 cut would cost £345 million in 2024-25”
- NICs are the second-largest source of tax revenue in the UK, after income tax. — theguardian.com (media) — “National Insurance Contributions (NICs) are the second-largest source of tax revenue in the UK, after income tax”
- Critics argue the cuts would necessitate either spending cuts or other tax rises, but no long-term funding plan has been detailed. — pa.media (media) — “such significant tax cuts would necessitate either cuts in public spending or increases in other taxes to compensate for the lost revenue, although the government has not detailed how this would be funded in the long ter…”
- Analysts raise concern about the long-term financial sustainability of abolishing this revenue stream without identified replacement funding. — pa.media (media) — “The long-term financial sustainability of abolishing a significant revenue stream like self-employed NICs without clearly identified replacement funding is a point of concern for various commentators”
Biggest unknown: Whether and how the lost revenue (~£2.3bn/yr) would be offset — if fully funded by other measures the verdict changes, but no such plan has been specified.
Our reading: The policy removes a material and rising stream of tax revenue — OBR-certified costs for the partial measures already implemented run to ~£725m/yr, and the Labour-cited estimate for full abolition is ~£2.3bn/yr by 2028-29. NICs are the UK's second-largest tax revenue source, so removing a chunk without identified replacement funding directly worsens the debt path. No funding mechanism is stated in the policy text or in any provided evidence. The absence of a replacement means this is, on the evidence, an unfunded tax cut — which the O12 criteria explicitly treat symmetrically with unfunded spending as a sustainability risk. The magnitude is moderate: £2.3bn/yr is real but not catastrophic relative to total receipts, and the reduction is phased over several years. The time horizon is this-parliament given the stated April 2029 completion date. Confidence is moderate because the cost estimate comes from a political opponent (Labour/PA Media) rather than an independent OBR costing of the full policy — a full OBR score could revise the figure. If a credible offsetting funding plan were identified, the verdict would shift toward negligible or mixed; as it stands, the evidence supports a worsens direction.
Cost of living — Helps
moderate · moderate confidence
Abolishing self-employed National Insurance would put more money in the pockets of around 4 million self-employed workers, with a typical earner on £28,000 saving over £1,500 a year by 2029 — but the cuts phase in slowly and the lowest earners gain nothing directly.
The evidence
- The policy pledges to abolish the main rate of self-employed National Insurance entirely by the end of the next Parliament, building on Class 2 abolition. — conservatives.com (manifesto) — “The Conservative Party pledges to abolish the main rate of self-employed National Insurance entirely by the end of the next Parliament, building on the abolition of Class 2 contributions from April this year.”
- An average self-employed person earning £28,000 is projected to save over £1,500 a year by April 2029 when combining this with previous tax cuts. — castlepointconservatives.com (media) — “An average self-employed person earning £28,000 is projected to save over £1,500 a year by April 2029 when combining this with previous tax cuts.”
- The current main rate of Class 4 NICs applies to profits between £12,570 and £50,270. — vertexaisearch.cloud.google.com (media) — “This applies to profits between £12,570 and £50,270, with a 2% rate on profits above £50,270.”
- Self-employed individuals with profits below £12,570 already do not pay Class 4 NICs and would not directly benefit from its abolition. — truemanbrown.co.uk (media) — “Self-employed individuals with profits below the Lower Profits Limit (e.g., £12,570 for 2025/26) already do not pay Class 4 NICs, so they would not directly benefit from its abolition.”
- The policy is expected to benefit approximately 4 million self-employed people, taking 93% of self-employed individuals out of paying Class 4 NICs. — castlepointconservatives.com (media) — “the full abolition of the main rate of Class 4 NICs will benefit approximately 4 million self-employed people, effectively taking 93% of self-employed individuals out of paying Class 4 NICs.”
- A self-employed worker on £35,000 would gain £1,350 from abolition of the main rate, though frozen thresholds offset some of this, leaving a net gain of £1,230 lower relative to today. — uk.finance.yahoo.com (media) — “a self-employed worker on £35,000 would gain £1,350 from the abolition of the main rate, their total tax bill in 2028-29 would be £1,230 lower relative to today, reflecting the offsetting effect of frozen thresholds.”
- Reducing self-employed NIC from 6% to 0% is estimated to cost around £2.28 billion in 2028/29. — pa.media (media) — “The Labour Party estimated that reducing self-employed NIC from 6% to 0% could cost £2.28 billion in the 2028/29 financial year.”
- Critics argue the cuts would necessitate either public spending cuts or increases in other taxes, with no detail on long-term funding. — pa.media (media) — “Critics argue that such significant tax cuts would necessitate either cuts in public spending or increases in other taxes to compensate for the lost revenue, although the government has not detailed how this would be fun…”
- Frozen thresholds reduce the overall benefit of the NI cuts for many workers. — uk.finance.yahoo.com (media) — “This "fiscal drag" effectively reduces the overall benefit of the NI cuts for many workers.”
Biggest unknown: Whether the cost (estimated at over £2 billion a year) would be funded through public spending cuts or other tax rises that could offset the benefit for ordinary households.
Our reading: This policy directly reduces a tax on self-employed profits, which straightforwardly increases disposable income for those who pay it — a clear improvement for the cost of living of around 4 million self-employed workers. The projected savings are meaningful: over £1,500 a year for a typical earner on £28,000, and even after accounting for fiscal drag from frozen thresholds, a worker on £35,000 ends up around £1,230 better off in net terms. These are real gains for ordinary self-employed households struggling with essentials. The improvements are, however, back-loaded: the full benefit arrives only in April 2029, with staged cuts in the intervening years. The lowest-earning self-employed — those with profits below £12,570 — gain nothing directly, so the distributional benefit skews toward middle earners rather than the poorest. The big unresolved question is fiscal: the policy is projected to cost over £2 billion a year with no identified funding source. If it is financed through cuts to public services or benefits, or through other tax rises, some or all of the household gain could be offset elsewhere. This is a genuine and significant uncertainty, but it is a contingent risk, not a certainty — on the face of the policy itself, self-employed households see a direct income improvement. The verdict is 'improves' at moderate magnitude, long-term, with moderate confidence reflecting the real but uncertain fiscal offset risk.
Good work & fair pay — Helps
moderate · moderate confidence
Abolishing self-employed National Insurance would put more money in the pockets of around 4 million self-employed workers — roughly £1,500 a year for someone earning £28,000 — but the gains phase in slowly and the lowest earners miss out entirely. The main caveat is that if the lost tax revenue forces cuts to public services or other tax rises, some of that benefit could be clawed back.
The evidence
- The policy pledges to abolish the main rate of self-employed National Insurance entirely by the end of the next Parliament, building on Class 2 abolition. — conservatives.com (manifesto) — “The Conservative Party pledges to abolish the main rate of self-employed National Insurance entirely by the end of the next Parliament, building on the abolition of Class 2 contributions from April this year.”
- Class 4 NICs currently apply at the main rate on profits between £12,570 and £50,270. — vertexaisearch.cloud.google.com (media) — “This applies to profits between £12,570 and £50,270, with a 2% rate on profits above £50,270.”
- Class 4 NICs are purely a tax on profits and do not contribute to state pension or benefit entitlements. — uk.finance.yahoo.com (media) — “Class 4 NICs do not currently contribute to state pension or benefit entitlements; they are purely a tax on profits.”
- An average self-employed person earning £28,000 is projected to save over £1,500 a year by April 2029. — castlepointconservatives.com (media) — “An average self-employed person earning £28,000 is projected to save over £1,500 a year by April 2029 when combining this with previous tax cuts.”
- Approximately 4 million self-employed people would benefit, representing 93% of self-employed individuals. — castlepointconservatives.com (media) — “the full abolition of the main rate of Class 4 NICs will benefit approximately 4 million self-employed people, effectively taking 93% of self-employed individuals out of paying Class 4 NICs.”
- Self-employed workers with profits below £12,570 already pay no Class 4 NICs and would not directly benefit. — truemanbrown.co.uk (media) — “Self-employed individuals with profits below the Lower Profits Limit (e.g., £12,570 for 2025/26) already do not pay Class 4 NICs, so they would not directly benefit from its abolition.”
- Abolishing self-employed NICs could cost around £2.28 billion in 2028/29. — pa.media (media) — “reducing self-employed NIC from 6% to 0% could cost £2.28 billion in the 2028/29 financial year.”
- Analysts argue the policy significantly increases the tax differential between employment and self-employment, distorting labour market decisions. — resolutionfoundation.org (institutional) — “deepens the extent to which the tax system incentivises self-employment, further distorting decisions in the labour market.”
- IFS estimates a self-employed worker on £35,000 would gain £1,350 from abolition but their total tax bill would be only £1,230 lower due to frozen thresholds. — uk.finance.yahoo.com (media) — “a self-employed worker on £35,000 would gain £1,350 from the abolition of the main rate, their total tax bill in 2028-29 would be £1,230 lower relative to today, reflecting the offsetting effect of frozen thresholds.”
- Critics argue such cuts would necessitate spending cuts or other tax rises to compensate for lost revenue. — pa.media (media) — “Critics argue that such significant tax cuts would necessitate either cuts in public spending or increases in other taxes to compensate for the lost revenue, although the government has not detailed how this would be fun…”
Biggest unknown: Whether the ~£2.3 billion annual revenue loss is offset by spending cuts or other tax rises that could reduce or reverse the net gain for workers.
Our reading: For the 4 million self-employed workers who pay Class 4 NICs, this policy delivers a clear and direct pay improvement: roughly £1,500 a year for a median earner by 2029. Because Class 4 is a pure tax on profits with no link to benefit entitlements, abolishing it translates directly into higher net earnings without touching state pension rights. The gains are real and measurable in principle, supporting the 'improves' verdict on pay levels and take-home income for the self-employed. However, three factors temper the magnitude and confidence. First, the gains phase in over five years, so the effect on living standards is long-term, not immediate. Second, frozen thresholds partially offset the NIC cut — a worker on £35,000 gains £1,350 in NIC savings but only £1,230 in net tax relief, showing fiscal drag erodes some benefit. Third, the lowest-earning self-employed (below £12,570) see no direct benefit at all, so the policy is not well-targeted at those most in need of income support. On the labour market distortion risk: IFS and Resolution Foundation warn the widened tax gap between employment and self-employment incentivises bogus or sub-optimal self-employment, which could over time reduce job quality and security for workers currently in employment. This is a real projected downside but it affects a different group (employees), not the self-employed workers who directly benefit. The funding gap (~£2.3bn/year) is the biggest systemic risk: if it forces public spending cuts that affect services workers depend on, the net welfare gain narrows. On balance, the direct, evidence-backed pay gain for 4 million workers outweighs the contested, indirect risks — hence 'improves' at moderate magnitude.