Now Treasury plans raid on high earners who work for themselves

WEALTHY self- employed workers could be stung with an extra tax bill in next week’s Budget.

The Treasury is believed to be planning to iron out discrepancies between the tax paid by staff at businesses and those who work for themselves.

There is a perception that the richest selfemployed workers are treated leniently under current rules.

It is a growing area, with five million selfemployed workers in the country – up from three million in 2000.

Chancellor Philip Hammond is likely to unveil a consultation on how this group is taxed in Wednesday’s Budget.

He could also announce immediate changes, although this is thought to be less likely. Employees and the self-employed pay the same rates of income tax, but the latter group pays only 9 per cent in national insurance while the employed pay 12 per cent.

There is also growing concern that selfemployed people are using umbrella companies as a way of avoiding bigger tax bills.

One study found that on an income of £100,000, the amount of tax the Government got from an employed worker was £40,000, including a contribution from their employer. However, self-employed workers earning the same paid around £35,000 and those using a company £33,000. It is an increasingly popular way of avoiding taxes.

The number of self-employed people working in advertising has doubled since 2009. In public administration, there has been a 90 per cent increase, and it is up by 60 per cent in banking.

Some hedge funds only employ the most junior staff on their payroll to save their managers cash.

Although changes would help to make sure that the rich paid their fair share, the situation is complicated by thousands of the lowest earners who are also in self-employment.

These include delivery and taxi drivers, as well as sole traders.