A planned tax cut worth about £150 per person has been scrapped for 2.7 million self-employed workers by the UK government.

The government had originally planned to remove Class 2 National Insurance contributions (paid by self-employed people with profits of £6,205 or more a year) in April but the move had been delayed by a year and has now been shelved completely.

The government explained that the u-turn came about due to concerns that low-earning self-employed workers would pay more to access pension entitlements and because it would make the tax system more complex.

The Shadow Chancellor of the Exchequer, Labour's John McDonnell called the move a "betrayal of the self-employed".

Treasury Minister Robert Jenrick said: "The government remains committed to simplifying the tax system for the self-employed and will keep this issue under review in the context of the wider tax system and the sustainability of the public finances."

However, the news was received badly by the Association of Independent Professionals and the Self-Employed (IPSE). Andy Chamberlain, IPSE's Deputy Director of Policy commented:

“This decision to backtrack on a pledge to abolish Class 2 NICs – a awkward levy which applies only to the self-employed – is a fundamental breach of faith with the sector. This Government-led attack on the self-employed is the latest in a barrage of bad decisions which has left our smallest businesses feeling helplessly abandoned.”

“Only last year this supposedly pro-business Government try to shackle the self-employed with an increase in Class 4 NICs. Even though they eventually u-turned – thanks in no small part to IPSE’s lobbying work – they had clearly set their sights on the self-employed. Combined with other disastrous policies such as the planned extension of damaging IR35 reforms to the private sector and talks about lowering the VAT threshold, this latest decision serves only to stifle the UK’s self-employed workforce.”

“The Government should be finding ways to help the UK’s 4.8 million self-employed people. They could do this by sticking to their promises and removing burdensome tax mechanisms such as Class 2 NICs. Instead, they seem intent on squeezing as much revenue out of the self-employed as possible.”