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The system does not support modern working patterns.
National Insurance contributions and income tax should be brought closer together to create a simpler and fairer system for business and taxpayers. The Office of Tax Simplification (OTS) has published a report building on the one in March 2016 setting out the case for National Insurance reform with an indicative five year timetable.
The report found that it is widely acknowledged that National Insurance is out of date. It no longer supports modern working patterns and creates unfair outcomes between taxpayers. It is complex to administer making it difficult for taxpayers to understand how much they should pay and the impact it has on their entitlement to benefits. A simpler system would treat everyone’s earnings in the same way for income tax and National Insurance. This could change how muchsome people pay but would not raise taxes overall.
John Whiting OTS tax director said:...
