Goodbye National Insurance - hello Earnings Tax

24 February 2014

According to a report in The Daily Telegraph National Insurance could be renamed ‘earnings tax’.

Ben Gummer MP, a rising star Tory backbencher who has been campaigning on tax transparency, will propose the change in a Commons Bill on Tuesday.The proposed change, which apparently has Treasury backing, would be the first step towards merging income tax with National Insurance.

Mr Gummer is reported to have said, “I am very pleased the government is interested in the idea. They have been very receptive to trying to make the tax system more transparent.

This would be a really good step forward in making what the government takes from taxpayers clearer and simpler.”

Mr Gummer said he hoped the name change would begin the process of merging National Insurance with Income Tax into one single charge. He said: “The most important part is changing the name so in the public mind we can begin the two as the same, which they are. This is a first step.”

Read the full story from The Daily Telegraph.

CIPP comment

The CIPP welcome the government’s transparency around the tax system; long overdue. The CIPP does in principle support a change of name if it is the government’s intention, with cross party agreement, to look at merging the two systems. Changing the name just to prove transparency, will put payroll software and other professions (training etc.) within the payroll industry to unnecessary administrative and potentially cost burdens if this isn’t their intention. The CIPP looks forward to the formal announcement from the government and to the consultation from HMRC and or HMT, along with confirmation of when this change is likely to happen. There will be a number of areas to consider in addition to the employee and employer Class 1 National Insurance changes, such as Class 1A and 1B. Any associated legislation will also need to be amended. Your policy team will be keeping a close eye on this and will of course ensure the profession is represented when the consultation starts.