Income tax and NICs to become one ?

The Chancellor announced plans to consult on the merger of income tax and NICs on the basis that operating two completely different systems “imposes totally unnecessary costs and complexity on employers, and costs the taxpayer in the extra burden it places on HM Revenue & Customs”.   A consultation document will be published later this year setting out proposals to achieve this.  

 This is one of a number of measures recommended by the Office of Tax Simplification,  which was established by the Chancellor in July 2010 to identify areas where complexities in the tax system can be reduced.  Clearly, reform of this area will require careful consideration to ensure the changes do not result in the income tax system becoming even more complicated for both taxpayers and HMRC!

2 thoughts on “Income tax and NICs to become one ?”

  1. This will be extremely difficult to achieve in the UK. People over pension age do not pay National Insurance, and the N.I. payments are the basis of some benefits. It was done successfully in New Zealand about 30 years ago.

    1. Thanks for your comment. Yes, I understand the Government are planning to have a very long consultation period in relation to this proposed change as they recongnise it will be very difficult. It is this contributory principle that is going to be very challenging to effectively maintain if the two are merged.

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