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Tax in a changing world of work

Journal article | Tax Journal

Since the recession there has been a rapid rise in the number of individuals operating through self-employment or company owner-management. These groups are taxed substantially less heavily than employees despite receiving very similar state benefits. This creates a tax system that is complex, inefficient and unfair. In Budget 2017, the chancellor tried to take a small step towards a better tax system by increasing self-employed NICs. He failed. The best thing we can do now is unite around a long run vision for how we should tax different ways of working and start designing a pathway for getting there.

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IFS Working Paper W19/31
The UK taxes business income at much lower rates than employment income. In this paper we describe the problems caused by that differentiation and assess the main arguments used to defend it. We summarise the Mirrlees Review’s proposals for radical reform that would align tax rates across legal ...