Treasury in call for evidence on income tax/NIC link

The Government today issued a call for evidence as part of considerations to simplify the way it deals with income tax and National Insurance contributions (NICs).

Announced in Budget 2011, the Treasury believes greater integration of the two systems will benefit empoyers and taxpayers as well as reduce the administrative burden on HMRC.

For decades, the government has operated income tax and NICs as two fundamentally different systems with different periods and bases of charge.

The concept of merging income tax and NI to create a basic tax of 32% was recommended by the Office of Tax Simplification (OTS) ahead of this year's Budget.

"We believe that greater integration of the two systems has the potential to remove economic distortions, reduce burdens on business, and improve fairness across individual earners," the government said today.

David Gauke, Exchequer Secretary to the Treasury, said the changes are part of a wider programme of tax reforms which the government hope will make the UK's tax system the most competitive in the G20.

The Treasury will consult on reform options in the autumn based on responses to its call for evidence.

Read the 18-page call for evidence HERE. The deadline for responses is 19 September.