IFS is an established independent research institute, which specialises in the economic analysis of public policy. It aims to bridge the gap between purely academic research and issues of practical policy design or evaluation. The Institute strives to be at the forefront of UK and international research in its chosen fields, but also places a high priority on the policy relevance and communication of its research.

The research at IFS is largely oriented towards microeconomic analysis, and has a strong quantitative flavour. The Institute makes extensive use of the major surveys of households, company behaviour and individuals, alongside government administrative data, to analyse the impact of taxation and other public policies on household living standards and individual behaviour. Among other things, it maintains a detailed simulation model of the UK tax and benefits system, which is used for analysing the effects of Budget tax measures and social security policy changes. Other issues, including corporate taxation, the public finances and individual spending, saving behaviour and development economics, are also studied using detailed data sets and purpose-built models.

Research is disseminated through the IFS website, an extensive conference programme, various IFS publications, the journal Fiscal Studies, and other academic journals. Much IFS research receives wide press, radio and television coverage. Researchers also attend and present research at academic and policy conferences in both the UK and abroad, give evidence to select committees and meet to discuss policy implications of their research with civil servants, UK policymakers and foreign delegations. In recent years, IFS has significantly influenced debate in a number of key areas, such as the public finances and public spending, tax reform, active labour market policies, education policy and pension and saving policy. The Institute aims to improve the quality of public debate by providing impartial information and analysis on issues of public interest, from a politically independent perspective underpinned by rigorous academic economic research.

The Institute's funding comes from a range of sources, including the UK Economic and Social Research Council (ESRC), research charities, government departments, the European Union, and subscriptions paid by Individual and Corporate Members. IFS has received major long-term funding from the ESRC since 1991 for an ESRC Centre for public policy research and since 2007 for a second Centre to carry out research into quantitative methods. All IFS research is intended for publication, and the Institute does not undertake work for the private use of individual sponsors.