The U-turn by the government came a week after chancellor Philip Hammond used his 8 March Budget to announced an increase in national insurance contributions.
RSN chief executive Graham Biggs MBE said: "The impact of any increase would have been greater on the rural economy."
Some 17.6% of employed people in rural areas were self-employed – compared to 14.6% of employed people in urban areas for the year October 2015 to September 2016.
See also: Little joy in Budget for rural business
Mr Biggs added: "The government needs to reflect on this point as it develops its thinking on this issue."
Rural insurer NFU Mutual said the U-turn would come as a "huge relief" to rural businesses and the majority of farmers who were self-employed,
Chartered financial planner Sean McCann said: "These measures would have increased financial pressure on self-employed farmers, contractors and the many country people who are already facing a difficult period in the run-up to Brexit."
The chancellor has already signalled that he would be looking to redress the gap in revenue caused by the 'U' turn.
Mr McCann warned that this meant Mr Hammond could seek other ways to increase taxation of small businesses – or reduce the benefits available to them.
The government might consider that agricultural relief could be eroded without triggering the backlash seen over national insurance
"It may be that Philip Hammond goes after tax reliefs available to farmers and businesses – such as Agricultural Property Relief and Business Property Relief," said Mr McCann.
"We'll be watching the Chancellor's Autumn Budget closely and alerting farmers to measures we feel could unfairly affect their finances."