The NI system, introduced in 1946 as a contributory welfare fund, adds 'enormously' to an already complex tax system, yet is merely another tax, they claim.

'What we currently have is an extension of the taxation system masquerading under a different guise, which adds enormously to the complication of the overall system,' George Cox, director-general of the IoD said, The Times reported.

The BCC is demanding a three-stage approach to eventually 'amalgamate employee's national insurance contributions into income tax'. The first would be to put NI on the same earnings base as PAYE and calculate it on an annual basis.