Have your say on National Insurance and Income Tax alignment

By Philip McNeill, Head of Taxation, Practice and Small Business

9 December 2015

The ICAS Tax Team is encouraging you to have your say on plans to bring National Insurance and Income Tax closer together.

Many people, including members, could be affected by the Office of Tax Simplification’s (OTS) latest project to bring Income Tax and National Insurance closer together.

Some things make life hard work, and one of these is the difference between Income Tax and National Insurance.

The  UK Government may well legislate following the OTS recommendations; and you have a chance to influence the outcome by completing a simple one page survey – before 31 December.

What’s in the survey?

For self-employed individuals and for employees, there are seven questions and a comments box. These test your knowledge of Income Tax and National Insurance as well as inviting opinions.

Do you think employees and the self-employed should pay National Insurance at the same rate, and get the same social security benefits? Should someone with three part-time jobs pay the same National Insurance as someone who earns the same, but in a single job?

For payroll providers and tax advisers, there is a 19-point survey, with the chance to give your top ‘quick win’. OTS is interested in any particular problem areas you come across, so if you have a regular headache issue, this is your opportunity to get it noticed. A longer survey is also available.

Why it matters

National Insurance started life as a plan to provide pensions and welfare support for workers, but it has turned into a second tax. Employer’s National Insurance is sometimes seen as a tax on jobs.

While wholesale abolition or complete alignment of bands and rates is politically unlikely, there are specific areas which can be improved. These include:

  • Alignment of rules in specific cases – for example for internationally mobile employees; or for employee benefits in kind.
  • A policy commitment aiming to decrease the differences – for example bringing rates for employed and self-employed workers nearer together; bringing National Insurance onto the same annual basis as income tax; and, in the longer term, aligning thresholds.

Find out more about the the terms of reference for the OTS report.


  • Tax

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