Treasury announces tax equalization for self-employed workers ahead of March budget
The Treasury further echoed his view that self-employed workers should be taxed at the same rate as salaried workers, fueling speculation about possible changes in the March budget.
However, the government has also downplayed the need for an immediate tax hike to deal with the mountain of debt the Covid crisis has produced.
Speaking to members of the Treasury Select Committee, Treasury Financial Secretary Jesse Norman was asked whether it was fair for the self-employed or limited liability companies to pay less tax than the employees.
“The position of the Treasury is that at the tax level, if people do the same job, they should be taxed in the same or a similar way,” said the Minister of the Treasury.
His comments also echo those of Chancellor Rishi Sunak, who said when announcing the extension of the leave scheme for the self-employed last March: “If we are all to benefit equally from state support , we all have to pay equally in the future. There is currently an inconsistency in the tax treatment of employees and the self-employed. ‘
The latest comments from the Treasury Minister show that the government is keen to harmonize the tax system between employees and the self-employed.
However, when Norman was pressed on whether the budget would include tax increases, he played down that suggestion.
“It’s quite striking if you look at the Office for Budget Responsibility scenarios, the optimistic scenario brings us back to the growth trajectory he anticipated in March. And so it is not clear that a future fiscal consolidation is necessary.
His comments come as a number of press articles have suggested over the weekend that the Treasury will announce tax hikes in the next budget to foot the Covid bill. Sunday Times the reported changes to stamp duty and housing tax were under consideration.
When pushed further on tax changes, however, Norman discussed the idea of a “tax day” where further tax consultations could be announced after the budget.