Last week, George Osbourne , the chancellor of the ex-chequer presented his second budget for the UK since June 2010. The budget was described by Bill Dodwell, head of tax policy at Deloitte, as ‘a remarkably positive for businesses [..]unless you’re an oil company or a bank’.
One of the key issues presented by Mr Osbourne were plans to merge Income tax with National Insurance contributions to simplify the current tax system.
Integrating the two would result in a more streamlined system, reduction of bureaucracy and administration costs for businesses and the government.
But so far it’s only an idea. The government is yet to consult on the options, stages and timing of reforms needed prior to integration. According to Chas Roy-Chowdhury, head of taxation at the Association of Chartered Certified Accountants,”It is a lot easier said than done”. He believes that key considerations would need to include how to prevent people who retired early being charged extra tax, and how to replace the employers’ National Insurance contributions.
Delloitte’s advisors also share this opinion. They are convinced that despite the longstanding pressure to rationalise income tax and National Insurance, it will be the details that cause the problems. That is presumably why no solutions have been found before now.
Whatever the scope, Delloitte expects a significant amount of consultation on this subject over the coming months and years.