Income tax-NIC integration hits delay
The government has delayed a consultation on options to integrate the operation of income tax and National Insurance Contributions (NICs).
The consultation was due to start after the March Budget after discussions with employers and other groups. But due to the technical challenges involved in integrating the operations of income tax and NICs -- and the potential disruption for employers’ payroll systems - the consultation will now not be held until after the summer, the Treasury said.
“As many stakeholders have recognised, this is a complex issue with potentially significant implications for employers’ payroll operations,” the Treasury said at the end of May.
Tax experts have welcomed the plan to integrate the operations of income tax and NICs but have warned that the project will have to overcome some big technical and administrative challenges.
Plans to integrate NICs and income tax coincide with a separate overhaul of the tax system. A planned move to Real Time Information (RTI) for PAYE records will see employers send the taxman information about tax and national insurance deductions at the same time as they pay their employees, rather than at the end of the financial year.