Salaries over £25,000 are effectively taxed at 40 per cent, a third higher than self-employed income, according to an analysis warning that anomalies in the tax system are harming economic growth.
The Institute for Fiscal Studies (IFS) is calling for reform of council tax, inheritance tax, stamp duty and “crazy” variations in marginal income tax rates to boost the economy.
The think tank reiterated its warnings that one in eight adults has been dragged into the higher rate of income tax, paid on earnings over £50,271. This figure will rise to one in seven as a result of threshold freezes by Rishi Sunak, previously described as the biggest tax rise in 40 years.
Employees are penalised by a tax system that treats dividends and capital
