Is this the end of the road for national insurance?
2016 might see the wheels set in motion for one of the biggest shake-ups of the UK tax system for decades.
George Osbourne, the Chancellor of the Exchequer, has commissioned The Office of Tax Simplification (OTS) for a study into whether merging income tax and national insurance into a single ‘earnings tax’ would be beneficial or detrimental to both tax payers and HMRC.
National insurance, in its current form, dates back to 1911 when it was established to help working people insure against illness and unemployment. After the Second World War it was expanded to fund what has now become the NHS and is charged at 12p for every pound of our income. The national insurance system has developed over the years in-line with income tax, but many now argue that the time has come for the two to be aligned.
In the past, both the current and previous governments have considered merging the two taxes, however were regularly put-off by potential issues aligning the two IT systems together. With the news yesterday that Lin Homer, Chief Executive of HMRC is leaving her post in April, perhaps her successor will bring up the proposal with the Chancellor once again.
Initial feedback about the idea has reportedly been almost unanimous in support of the idea, we’d like to know what you think?
The OTS will publish its report before the Budget this year and you can have your say on the issue by contacting the OTS directly here.
As changes in legislation are announced, such as auto enrolment for example, IRIS analyses the changes and implements them into our software, making any changes as smooth as possible to help ensure legality.