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Original poster

Merging NI and income tax

61 replies

longfingernails · 17/03/2011 23:08

There are rumours that George Osborne will merge NI and income tax in the Budget.

What a superb idea!

Simplify the system, and make Britain's true ~65% income tax apparent to all - then cut the true income tax rate by scrapping more quangos, cutting red tape, and clamping down harder on benefit scroungers.

No more will future Labour governments be able to hike the income-tax-in-all-but-name.

OP posts:
ChasingSquirrels · 18/03/2011 10:17

Yes it would.
It would also be a big hit for the (how many??) small company business owners who are paying themselves a nominal salary and dividends.

meditrina · 18/03/2011 10:13

That would be a big hit for pension funds.

ChasingSquirrels · 18/03/2011 10:12

NI is completely separate from dividend tax, in that dividends are not subject to NI. But if NI was abolished and a "composite rate" introduced what would it apply to?
Currently dividends are taxed at a different rate to other income, my point was that I would like to see this abolished and dividends to be taxed at the normal income tax rate.

meditrina · 18/03/2011 10:08

It would hit badly those who have been retired early (eg on medical grounds) who would not benefit from age-related adjustments and who have already similarly missed out after the abolition of the 10% tax band.

How would it interact with dividend tax? I thought that was completely separate.

ChasingSquirrels · 18/03/2011 10:00

It wouldn't have to mean large rises for pensioners - it could be combined with an increased age related allowance.
I would also do away with the different rates of dividend tax.

meditrina · 18/03/2011 09:58

I disagree strongly with this. It would mean large rises for pensioners (who currently pay no NI) and who have limited or non-existent opportunity to do anything about altering their income stream.

ivykaty44 · 18/03/2011 09:52

NI is one of the most contentious taxes on the poor, they only steal sweets form from poor children in the streets and leave rich kids to stuff their faces.

A tax that drifts away the more you earn the less you pay isn't ever going to be fair or seen as fair

ChasingSquirrels · 18/03/2011 09:51

totally agree on scrapping NI and having a single tax, it is no longer a "national insurance" and is used to raise taxes without affecting the headline rate.

I'm a basic rate tax payer and receive tax credits, my marginal "tax" rate is actually 73% when you include income tax, NI and tax credit claw-back.

Chil1234 · 18/03/2011 09:48

NI money is just tax. A simple flat-rate income tax and a personal tax-free allowance that applied to everyone equally ... why is that deserving of sweet-stealing accusations? Hmm The principle stands that those that earn the most pay the most, we'd lose the disincentive to earn more because there would be no HRT threshold to bump up against and it would be far easier to calculate taxes due.

Paul88 · 18/03/2011 08:10

Flat rate - so that would include NI would it - scrap the upper earnings limit?

Do you two steal sweets from children in the street too?

Chil1234 · 18/03/2011 06:19

Anything that simplifies the tax system gets my support. I'd also like to see a flat rate rather than the current tiered system... but that's never going to happen :)