thecrashingisles Posted March 17, 2011 Report Share Posted March 17, 2011 http://citywire.co.uk/new-model-adviser/office-of-tax-simplification-calls-for-ni-and-income-tax-merger/a477725 The Office of Tax Simplification (OTS) has recommended merging income tax and national insurance (NI) in its interim report on small business tax.Following representations from small businesses, the OTS report said the distinction between NI and income tax created ‘anomalies’ and complexity. ‘The issue of combining income tax and national insurance national insurance contributions (NICs) has been raised frequently in workshops, formal submissions and email contributions. There was an almost unanimous view from small businesses and advisers that legislative change in this area can deliver genuine simplification,' it said. ‘Maintaining two separate systems leads to a number of anomalies that provide incentives to distort behaviour. This leads to decisions being taken that are wholly tax driven, and in many cases are more complex and may not otherwise make commercial sense.’ The report’s key recommendations are: * Integrating income tax and national insurance contributions, including the employment and self-employment boundary * A ‘radical’ overhaul of the way the ‘very smallest’ unincorporated business are taxed I think this change is long overdue. From an HPC perspective it will also see an increase in taxation on BTL income and in overall terms will shift the tax burden away from earned income. Quote Link to post Share on other sites
Nuggets Mahoney Posted March 17, 2011 Report Share Posted March 17, 2011 http://citywire.co.uk/new-model-adviser/office-of-tax-simplification-calls-for-ni-and-income-tax-merger/a477725 I think this change is long overdue. From an HPC perspective it will also see an increase in taxation on BTL income and in overall terms will shift the tax burden away from earned income. I think you've answered your own question there Quote Link to post Share on other sites
pilchardthecat Posted March 17, 2011 Report Share Posted March 17, 2011 No he won't. Pensioners don't pay NI. Quote Link to post Share on other sites
Bloo Loo Posted March 17, 2011 Report Share Posted March 17, 2011 No he won't. Pensioners don't pay NI. And nobody receives any. Quote Link to post Share on other sites
thecrashingisles Posted March 17, 2011 Author Report Share Posted March 17, 2011 Pensioners don't pay NI. Increase the allowance for over-65s. It would be easy to include a sweetener for pensioners that would avoid all the complexity and loop-holes of the current system. Quote Link to post Share on other sites
pilchardthecat Posted March 17, 2011 Report Share Posted March 17, 2011 Increase the allowance for over-65s. It would be easy to include a sweetener for pensioners that would avoid all the complexity and loop-holes of the current system. What about the self employed, sole traders etc? Quote Link to post Share on other sites
HomeSeeking Posted March 17, 2011 Report Share Posted March 17, 2011 Not sure how he could present if he wanted to do it. "Basic Rate income tax is now 35 pence in the pound instead of 20?" Don't think the sheeple would like to hear the reality of the tax levels on earnings. Quote Link to post Share on other sites
pilchardthecat Posted March 17, 2011 Report Share Posted March 17, 2011 Not sure how he could present if he wanted to do it. "Basic Rate income tax is now 35 pence in the pound instead of 20?" Don't think the sheeple would like to hear the reality of the tax levels on earnings. He's more likely to cut income tax to 10% and introduce three new levies on income Quote Link to post Share on other sites
TheCountOfNowhere Posted March 17, 2011 Report Share Posted March 17, 2011 They need a department/office to work that out !!! Holly s**t these people are either stupid or corrupt. Quote Link to post Share on other sites
porca misèria Posted March 17, 2011 Report Share Posted March 17, 2011 I think this change is long overdue. From an HPC perspective it will also see an increase in taxation on BTL income and in overall terms will shift the tax burden away from earned income. I don't think he'll be allowed to. Sir Humphrey will conclusively and unanswerably demonstrate the catastrophic folly of doing any such thing. Quote Link to post Share on other sites
Patfig Posted March 17, 2011 Report Share Posted March 17, 2011 They need a department/office to work that out !!! Holly s**t these people are either stupid or corrupt. Holly s**t these people are stupid and corrupt corrected for you Quote Link to post Share on other sites
Dorkins Posted March 17, 2011 Report Share Posted March 17, 2011 But if they merged income tax and NI, how would the government know which money to put in the big national insurance pot it has been steadily accumulating for the last 55 years? It has been doing that, right? Right? Quote Link to post Share on other sites
Georgia O'Keeffe Posted March 17, 2011 Report Share Posted March 17, 2011 But if they merged income tax and NI, how would the government know which money to put in the big national insurance pot it has been steadily accumulating for the last 55 years? It has been doing that, right? Right? if i remember rightly the UK Sov Wealth Fund generated through lifelong NI payments was underfunded by about 3% in 2000 so Brown bought loads of Gold so its now massively overfunded Quote Link to post Share on other sites
copydude Posted March 17, 2011 Report Share Posted March 17, 2011 But if they merged income tax and NI, how would the government know which money to put in the big national insurance pot it has been steadily accumulating for the last 55 years? It has been doing that, right? Yes . . . You might as well merge Road Fund tax as well and all the other 'earmarked' stuff that only goes into one big Treasury tub. Pensions and health insurance contributions should have been separated away from Government years ago into a scheme that would actually invest them into a fund for just that purpose. Quote Link to post Share on other sites
gf3 Posted March 17, 2011 Report Share Posted March 17, 2011 (edited) I can see the out cry from save our savers when they get taxed at 32% on the interest of their savings Edited March 17, 2011 by gf3 Quote Link to post Share on other sites
ralphmalph Posted March 17, 2011 Report Share Posted March 17, 2011 He's more likely to cut income tax to 10% and introduce three new levies on income As a political statement re-introducing the 10% tax band that Brown removed would not surprise me. Quote Link to post Share on other sites
corevalue Posted March 17, 2011 Report Share Posted March 17, 2011 I can see the out cry from save our savers when they get taxed at 32% on the interest of their savings Yep. I wonder how much revenue the government are losing because of the low IR environment? It'll be like diesel, because they can't sell as much (the cars do more mpg), they tax it more instead. Quote Link to post Share on other sites
Andy D Posted March 17, 2011 Report Share Posted March 17, 2011 I can see the out cry from save our savers when they get taxed at 32% on the interest of their savings It'll bump up sales of ISAs... Earned and unearned income should be taxed in the same way Are there any figures oh how much NI costs to collect? Andy Quote Link to post Share on other sites
Stars Posted March 17, 2011 Report Share Posted March 17, 2011 (edited) Earned and unearned income should be taxed in the same way They shouldn't. Unearned income should be taxed in preference to earned income. Though governments like to fudge and confuse this issue as much as they can. One means of doing this is by calling things 'unearned' and 'earned' randomly, rather than using simple reason. Edited March 17, 2011 by Stars Quote Link to post Share on other sites
Nuggets Mahoney Posted March 17, 2011 Report Share Posted March 17, 2011 Earned and unearned income should be taxed in the same way Before Income Tax the reasoning used to be that earned income was simply an exchange of your labour for the equivalent in cash and therefore no profit was being made Unearned income, on the other hand, was accrued whilst the person receiving it sat on his or her rear end and was therefore all profit and eminently taxable If you take factors like risk into account the real situation is a little more complicated. However, I'm not sure that additional complication justifies the steady shift of the burden of taxation from unearned to earned income which has been quietly eased in over the years Quote Link to post Share on other sites
Andy D Posted March 17, 2011 Report Share Posted March 17, 2011 They shouldn't. Unearned income should be taxed in preference to earned income. Though governments like to fudge and confuse this issue as much as they can. One means of doing this is by calling things 'unearned' and 'earned' randomly, rather than using simple reason. What do you mean "by taxed in preference" - taxed more or taxed less? Andy Quote Link to post Share on other sites
Charlie The Tramp Returns Posted March 17, 2011 Report Share Posted March 17, 2011 Unearned income, on the other hand, was accrued whilst the person receiving it sat on his or her rear end and was therefore all profit and eminently taxable Who then funded their own retirement and saved the DWP having to pay them benefits. I can hold my head high. Quote Link to post Share on other sites
campervanman Posted March 17, 2011 Report Share Posted March 17, 2011 But if they merged income tax and NI, how would the government know which money to put in the big national insurance pot it has been steadily accumulating for the last 55 years? It has been doing that, right? Right? Wrong. All previous generations have paid for the retirement of the generations before, a concept that seems alien to Generations X+Y. Quote Link to post Share on other sites
Dorkins Posted March 18, 2011 Report Share Posted March 18, 2011 Wrong. All previous generations have paid for the retirement of the generations before, a concept that seems alien to Generations X+Y. The large Boomer generation had to support a fairly small interwar generation through 5-10 years of frugal retirement and lower healthcare spending, and now the fairly small X+Y generations are being asked to support the large Boomer generation through 15-20 years of retirement with a higher standard of living and much more healthcare. There is a difference. Quote Link to post Share on other sites
catsick Posted March 18, 2011 Report Share Posted March 18, 2011 This would be a very sensible thing to do as would increase tax on high pensions dividends and rental and other unearned income allowing a slightly lower total rate for the working stiffs , there would also be higher tax relief on pension contributions thus creating a bit fairer situation between the public and private sectors, There would undoubtedly be howls of protests from the final salary public employees but this way would be easier to get through than simply cutting the pensions of the better off so it should work well if the lower level allowances are increased. All sorts of crazy distortions could be fixed in one go too and possibly cgt and dividend taxes aligned with income tax if you were trying to be very fair, The question would be is a fairer tax system what they want or are the current loopholes reducing tax for the very wealthy something that the MP's want to keep in place at all costs ..... ? Quote Link to post Share on other sites
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