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Tax merger talks receive support

18 May 2011

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Chancellor George Osborne’s announcement in the Budget that the government will “consult on” merging National Insurance (NI) and income tax has been welcomed.

Mr Osborne (pictured) explained that the current system forces businesses to operate two different systems of administration, with two different periods and bases of charge.

He said: “The resulting anomalies are legion. And it imposes totally unnecessary costs and complexity on employers, and costs the taxpayer in the extra burden it places on HM Revenue & Customs.”

The speech was welcomed by Chris Cole, Managing Director of price comparison service Make It Cheaper, who said combining the systems would prevent firms from doing “unpaid administration for the government”.

“The issue is how do we incentivise companies to employ more people and tackle youth unemployment? I think they should be looking more at how to provide tax breaks and incentives – perhaps reducing NI contributions – in order to employ people in particular groups that you’d want to get into work.”

Tracy Ewen, Managing Director of independent commercial finance company IGF, said: “Everyone’s been wanting this to happen for years – it’s nirvana that you could have one single calculation that says if you earn £20,000 you pay X amount and £30,000 Y amount, but in reality its probably never going to happen.”

Copyright © Press Association 2011

HM Revenue & Customs

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