Budget 2017 tipped to tackle self-employed taxation
In fact, the chancellor is “likely” to use his statement on Wednesday to announce plans to overhaul the tax system for such one-person traders, The Times reported.
The newspaper added that Philip Hammond is expected to promise on March 8th that there will be tax changes for the self-employed announced later this year at the autumn Budget (previously it would have been called Autumn Statement 2017).
The indication is that this imminent Budget will be used by Mr Hammond to unveil the consultation he promised at Autumn Statement 2016, so the preferential tax treatment of those who work for themselves can be scrutinised.
The Institute for Fiscal Studies criticised this preferential treatment last month, around the same time that the head of the Taylor review, which could report on Wednesday, said tax is being ducked by some people who are creating independent forms of work for themselves.
But it is the IFS’s calculations that may have struck a chord with Mr Hammond, notably one showing that sole traders, like incorporated traders, pay less to the exchequer than full-time employees (whose pay is guaranteed and backed by a host of rights and entitlements).
In particular, the institute showed that a person paid
£40,000a year can receive £32, 294 after tax as an incorporated trader (known
as a PSC or limited company); £31,180 as a sole trading, self-employed
freelancer, but only £27, 738 as a member of staff.