The UK taxes business income at much lower rates than employment income. In this paper we describe the problems caused by that differentiation and assess the main arguments used to defend it. We summarise the Mirrlees Review's proposals for radical reform that would align tax rates across legal forms while protecting incentives to save and invest. Finally, we consider the obstacles to implementing such a radical reform and suggest an approach to making progress in practice.
Tax small business self-employment tax-motivated incorporation entrepreneurship