The Chancellor announced in April 2002 the increases which took effect on 6 April 2003, so he did not have to repeat the bad news this year. At least, no further increases were announced, as some people had predicted.

Employees and employers will each pay an extra 1% of salary over £4,615 in 2003/04, and the self-employed will pay an extra 1% on profits over the same level. Employees will see the increase on their April 2003 payslip, while the self-employed will only suffer it when paying the 2003/04 tax on 31 January 2005.

Because of the long delay between the announcement of the increase and its arrival, a number of ways of mitigating the impact have been raised in the last year, including the incorporation of self-employed businesses and the payment of dividends (which are not subject to NIC). There are no measures in this Budget to counter such plans, which may mean that the Government is not worried about them, or may mean that the Inland Revenue believe that existing rules can prevent avoidance unless taxpayers are
very careful.