Note: The chart assumes all NICs are incident on the worker whose earnings are taxed. Households are divided into 10 equal-sized groups based on their net income adjusted for household size using the modified OECD equivalence scale.
Source: Authors’ calculations using the IFS tax and benefit microsimulation model, TAXBEN, run on uprated data from the 2019–20 Family Resources Survey.
Lower headline tax rates on self-employment than on employment aren’t justified by differences in benefits or employment rights, and are poorly targeted at improving investment incentives.