Self-Employed Britons Still Better Off After Tax Hike, IFS SaysBy
Britons who work for themselves will continue to pay far less in national insurance-contributions than employees, despite the tax hike announced by Chancellor of Exchequer Philip Hammond in his budget, according to the Institute for Fiscal Studies.
Increasing the payroll levy on self-employed workers will close only a “small fraction” of the gap with their salaried counterparts, said IFS Director Paul Johnson.
“The tax advantage to being self-employed will still run into the thousands of pounds,” he told a briefing in London on Thursday, a day after Hammond announced the increase.
Hammond is facing criticism that he broke a 2015 Conservative Party election pledge not to raise national-insurance contributions, but the IFS welcomed the move as a step in the right direction.
“A tax system which charges thousands of pounds more in tax for employees doing the same job as someone else needs reform,” Johnson said. “It distorts decisions, crates complexity and is unfair. The incentives for companies to claim that people who work for them are self-employed rather than employees are huge.”