View more on these topics

Treasury rejects merger but looks to simplify NICs and income tax

The Government has stopped short of a full merger of National Insurance and income tax as ministers examine proposals to integrate the two systems.

The Treasury issued a call for evidence in July this year following a report from the Office of Tax Simplification highlighting the case for integrating National Insurance contributions and income tax.

In its formal response to the call for evidence, published this week, the Treasury says there is “a clear appetite for reform”, with most responses focused on making the system of National Insurance more like income tax.

The Treasury says any reforms are likely to target “alignment, simplification or operational integration” rather than a complete merger of the two regimes.

It says: “The Government will maintain the contributory principle that underpins National Insurance. Those in employment will continue to pay or be treated as paying National Insurance in order to receive financial support while out of work, whether through illness, unemployment or in retirement. As such, NICs will need to retain an identity distinguishable from income tax.

“National Insurance will remain a charge on the earnings of working-age individuals. The Government does not intend to extend NICs to other forms of income such as pensions, savings and dividends.”

Treasury exchequer secretary David Gauke says: “We are exploring ways in which we could integrate the operation of income tax and NICs, with benefits for employers and employees.

“The Government will be working in partnership with external stakeholders to identify options and will report on progress at Budget 2012.”

LEBC longevity director Nick Flynn says: “Any government moves to reduce the complexity of the tax system are welcome because at the moment it is hideously complex.”

Recommended

Five arrests made in FSA land banking investigation

The FSA have taken action against five individuals suspected of involvement in land banking through an unauthorised collective investment scheme. The FSA executed search warrants, with the assistance of the City of London Police,   on nine premises in Kent and Greater London which led to the five arrests. The regulator says it cannot comment further […]

Low-cost multi-asset options from HSBC

HSBC Global Asset Management has introduced a range of low cost risk-graded multi-asset funds of funds that invest mainly in tracker funds and exchange traded funds. 

LEBC to leave Sesame for Tenet

National IFA firm LEBC will leave Sesame for Tenet after 11 years due to “cultural differences” with the network. LEBC chief executive Jack McVitie (pictured) says Sesame is increasingly focusing on the distribution of financial products, while LEBC primarily offers advice to large corporate clients. He says: “We have had 11 and a half years […]

Trusts: Easier than you think?

Protection providers often extol the benefits of placing plans in trust. The advantages for clients are widely recognised and numerous – inheritance tax mitigation, avoiding probate delay, controlling claim proceeds, and so the long, familiar list continues. Yet, dismissed as unnecessary form-filling, or simply viewed as irrelevant in the context of a mortgage sale, less […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There is one comment at the moment, we would love to hear your opinion too.

  1. Once again Government has avoided necessary radical reform. The vast majority of people perceive NI, correctly, as just another tax, and have no understanding of how their deductions are worked out. It appears to many as an arbitrary system which simply penalises extra work. I myself am on the minimum wage, and tire of explaining to my co-workers that more hours leads to higher net earnings as well as higher tax.

    We should be moving toward a flat rate system, with no tax allowances at all, no jsa or hb, and a lifetime citizens income safety net, operated much like child benefit, with special help for people unable to work……… It would be a difficult goal to reach, but not made easier by going in the opposite diection with higher personal allowances and steeper taxes, and just tinkering at the edges – isn’t that what GB was always accused of?

Leave a comment

Close

Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm

Email: customerservices@moneymarketing.com