Differences in employment tax are unfair

2017-02-12 Jennifer Renney-Butland posted:

Differences in how employees, the self-employed and company owner-managers are taxed are 'costly, inefficient and unfair', according to a report by the Institute for Fiscal Studies (IFS). The IFS has concluded lower taxes for the self-employed are not justified by fewer employment rights. The report has set out a recommendation to level the employment tax playing field.

Interestingly, since 2008, a quarter of the growth in the workforce has come from the self-employed, with the total now at four million. The number of company owner-managers has doubled since 2008, currently standing at around 580,000.

The IFS also found that employed workers receive less favourable employment tax treatment, eg for a £15,000 income, tax on employees is £631 a year higher than if the income was earned by a self-employed person and £818 higher than if earned by a company owner manager.

Let’s hope that a levelling of the playing fields, which the IFS is suggesting, results in a reduction in taxes for employees, but somehow Renney and Co suspects it might be the other way round.

For queries on employment, self employed and consultancy status feel free to get in touch with us at 01225 632240 or at info@renneyandco.com.

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