The Chancellor warned as early as last March that self-employed people could see their contributions rise as the economy reels from the coronavirus crisis. He said: “There is currently an inconsistency in contribution between self-employed and employed.” Various experts have also hinted that Mr Sunak could target self-employed workers to raise funds amid the coronavirus pandemic and resulting lockdown. But this has sparked a tense debate, as many self-employed people have struggled during the pandemic.
Professor Len Shackleton, a research fellow at the Institute of Economic Affairs, told the Telegraph last month that a “significant” increase on taxes would be wrong.
He told the Telegraph: “This is completely the wrong time to be proposing significant tax increases, particularly on self-employment.
“Our eventual recovery will need many people to create work for themselves rather than relying on big business or the government to generate new employee jobs.”
He was responding to a report by the Institute for Fiscal Studies (IFS) which suggested the self-employed should pay more as the Government is losing £15billon in tax revenue a year as a result of the policy.
They said: “There is a large, unjustified and problematic bias against employment and labour incomes and in favour of business ownership.
“The differential tax rates create inefficiency, unfairness, complexity and revenue loss.”
The IFS added that for a job earning £40,000, a full-time employee could pay up to £4,300 more in tax than if the same work was done by someone with their own company.
Director of Policy at The Association of Independent Professionals and the Self-Employed (IPSE), Andy Chamberlain, told Express.co.uk this month that a tax hike on the self-employed would be “the straw that breaks the camel’s back.”
Mr Chamberlain has called on Chancellor Sunak to make the scheme more accessible.
He said: “SEISS 1 and 3 were 80 percent and SEISS 2 was 70 percent. We’d like to see this remaining at 80 percent.
“We can’t see any justification to make SEISS 4 any less generous – we are in a pandemic, we are still in lockdown and people are still struggling.
“We are calling on the Government to include these people in the next round of SEISS, because they would have done a tax return by now.
“Because they have done that, HMRC has the information it needs in order to process those grant payments.”