The government has asked experts to help it integrate national insurance contributions (NICs) and income tax.   

In a speech earlier this week, David Gauke Exchequer Secretary to the Treasury, said that the government was issuing a ‘call for evidence’ on combining NICs and income tax before beginning a consultation in the autumn.

‘Greater integration of the operation of the two systems has the potential to reduce burdens, remove distortions and improve fairness,’ Gauke told an audience at the Centre for Business Taxation.

Integrating two taxes won’t be straightforward. Not only are the two tax regimes administered by separate computer systems within HMRC, they also rely on different timescales, tax bands and rates.

And early moves to integrate NI and income tax will coincide with a separate overhaul of the tax system – a planned move to Real Time Information (RTI) for PAYE records that will see employers send report tax and national insurance deductions electronically  at the same time as they pay their employees, rather than at the end of the financial year. Real-time PAYE is due to start for big companies from April 2013.

A full merger of the two taxes could take up to five years to achieve.

From an article on AccountingWeb via BASDA