The Chartered Institute of Payroll Professionals ……………………………………………………………Policy News Journal
The OTS will publish a further report ahead of Autumn Statement 2016. The government will then respond in full on all the OTS’s proposals to bring IT and NICs closer together.
The merger of IT and NICs, the extension of NICs to non-earned income or to pension income, and international cross- border issues, are outside the scope of these specific reviews. However, the OTS has received (and will no doubt continue to receive) a range of views on these issues, and may reflect these where they contribute to future debate on simplification. The report will set out who might pay less and who might pay more (the ‘gainers and losers’), and the benefits and challenges of an ACA system of employee’s NICs and a payroll tax system of employer NICs including implementation and transitional issues.
The report is contingent on the availability of new data within the timescale, either based on deeper analysis of existing sources or on commissioning new data sets.
The report will enhance understanding and engagement with these issues with all impacted parties.
CIPP comment The Policy Team will continue to be involved in all consultation and will be asking for your input so please watch out for more news on this complex area.
The OTS are speaking at all of this year’s CIPP National Forums so if you haven’t yet signed up, visit the events area on our website to book your place – these events are free to members and there are limited spaces.
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Indicative five year timetable for NICs reform 15 November 2016
In a report published today on the closer alignment of Income Tax and NICs, the Office of Tax Simplification reaffirms its call for this outdated system to be reformed and support modern working patterns.
The report builds on the March 2016 report and sets out the case for NICs reform, with an indicative five year timetable.
The OTS has found that:
it is widely acknowledged that national insurance is out of date. It no longer supports modern working patterns, and creates unfair outcomes between taxpayers it is complex to administer, and this makes it difficult for taxpayers to understand how much they should pay and the impact it has on their entitlement to benefits a simpler, and fairer, system would treat everyone’s earnings in the same way, for both income tax and national insurance. This means that national insurance would be calculated in the same way as income tax, making it easier to understand this could change the amount some people pay, but would not raise taxes overall there is widespread support for the OTS’s reform proposals. So in summary, the closer alignment of income tax and national insurance is desirable and realistic. The income tax and NICs system was built for the working patterns of yesterday and not for today, let alone for tomorrow. Currently these two taxes on earnings operate very differently.
We live in a changing business environment, with diverse ways of working. There are a growing number of people who work in self-employment, multi jobs and freelancing.
It is in this context that ministers asked the OTS to review closer alignment – not merger – with a key aim of getting a more informed debate going on the implications of closer alignment.
The Chartered Institute of Payroll Professionals
Policy News Journal
cipp.org.uk
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