The Government has pushed back a consultation on integrating national insurance and income tax until after the summer due to the complexity of potential reforms.
In the Budget in March, Chancellor George Osborne hinted the Government could look to merge the two regimes. The Treasury was due to produce a consultation outlining possible reform options in April.
In a statement issued today, the Treasury says: “As many stakeholders have recognised, this is a complex issue with potentially significant implications for employers’ payroll operations.
“In parallel, the Government is looking in more detail at the interplays between options for integration and reforms to the welfare system. This includes the proposal announced at Budget to reform the state pension into a single tier pension, details of which will be set out in a forthcoming white paper.
“Finally, the Government also respects that some stakeholders have asked that we avoid consulting on this major issue over the summer months, particularly given the London Olympics.
“For these reasons, a consultation on IT/NICs integration will not be launched until after the summer. However, the Government remains committed to exploring the potential for integration and will provide an update on this work in the autumn.”
Hargreaves Lansdown pension investment manager Laith Khalaf says: “Clearly complexity is the biggest problem facing the Treasury in getting these reforms to work in practice.”