(1/5) The three-person tax problem.

It's possible to work for the same employer and be taxed in different ways depending on whether you're:

Employed
Self-employed
A limited company

Read on to find out more

(2/5) These differences arise because of the different ways the tax system deals with different things.

Employees pay income tax and national insurance.

(3/5) The self-employed pay income tax and Class 4 national insurance, which is lower than an employee.

(4/5) Owners & sole directors of limited companies can pay themselves a salary so just enough national insurance is paid to qualify for a state pension.

The rest can be paid in dividends, with a lower rate of income tax, while the company still pays corporation tax on profits.

(5/5) We're exploring the three-person tax problem in our evidence session on Tuesday 20 October at 9.30am as part of our #TaxAfterCoronavirus inquiry.

Watch it live here

https://www.parliamentlive.tv/Event/Index/226bccf3-5b87-4db4-9f91-d7a7ba8080d8

And find out more about our inquiry here

https://committees.parliament.uk/work/465/tax-after-coronavirus/