Self-employed boom
Posted on 09 Sep 2013
Self-employment boom highlights need for tax change
Looking ahead to next month’s Budget, Paul Johnson of the IFS warns that a recent rise in self-employment risks undermining the UK’s tax base. He cites OBR research which suggests that the relatively fast growth in the number of company owner-managers is likely to cost the Treasury an extra £3.5bn a year by the end of the parliament. This, Mr Johnson explains, is because the tax system treats the self-employed more favourably than it treats employees, by allowing them to manage income so they can avoid paying higher rate tax and by offering a generous CGT regime. He suggests that the chancellor should focus on addressing flaws in the current system, warning that failure to do so will only result in the tax base eroding further.
