Government takes first step towards income tax – NI merger

The CIoT has welcomed the coalition’s first step towards merging income tax and National Insurance. Accountants and payroll professionals will no doubt also have a keen eye on developments over the next few months.

The Institute of Taxation said the government should be congratulated on its plan to gather evidence on the problems businesses face when coping with separate taxation regimes.

Anthony Thomas, the president of the CIoT said the recent report from the OTS showed that employers and HMRC would make real administrative savings if the two taxes were merged. A formal consultation into the merger is due to be launched this autumn.

As part of the initial process, employers and payroll professionals are being asked 14 questions which focus mainly on the burden of managing income tax and NI.

The exchequer secretary to the Treasury, David Gauke, said integrating NICs and income tax will be a radical reform but the government believes it could bring real improvements.

This is the first step in the consultation process and the coalition would like to hear the views of business owners and stakeholders before it proceeds with the next consultation in the autumn.

The Treasury has also confirmed that NICs will not be levied on pensions or people above pension age, dividends or savings.

Thomas said the government was right to rule out extending NICs to pensions and savings income as this could have overshadowed the process of consultation.

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