CIOT: Chancellor has ‘grasped nettle’ on national insurance and income tax reform

Vincent Oratore, president of the Chartered Institute of Taxation (CIOT), said in response to the Budget’s review of national insurance and income tax integration:

“We congratulate the chancellor on finally grasping a nettle that successive administrations have shied away from. As the Office of Tax Simplification report has shown, there are real admin savings, especially for employers, in harmonising the way the two taxes are run. This is a complex issue and it is clearly right to study it carefully – but we must make progress on this important issue.

“It was sensible to reassure pensioners that any changes will not result in national insurance contributions (NICs) being charged on pensions, nor savings income.

“However, we are disappointed that he has ruled out considering the abolition of the contributory principle. With the announcement elsewhere in his speech of moves towards a flat rate pension, the burden of running the contributory aspects of the system may outweigh the benefits.”