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Closer alignment of income tax and national insurance contributions.
Bringing National Insurance and income tax closer together would create a simpler and fairer system for businesses and taxpayers says the Office of Tax Simplification (OTS).
It recommends a seven-stage programme to achieve a system more aligned to current and future working patterns but cautions that the effects need to be carefully understood and considered. The stages are:
- move to an annual cumulative and aggregated assessment period for employee contributions as happens with PAYE and income tax;
- base employers’ National Insurance on whole payroll costs;
- align the National Insurance position for the self-employed with that of employees;
- improve transparency for National Insurance and the contributory principle;
- align the definition of earnings for income tax and National Insurance to make it more equal for employees and cut the burden...
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