TaxCorporate TaxNI and Income Tax merger “would simplify system”, says OTS

NI and Income Tax merger "would simplify system", says OTS

The Office of Tax Simplification report recommends revisions to 17 reliefs and abolition of a further 47, but stops short of recommending merger of national insurance and income tax, despite highlighting benefit

MERGING NATIONAL INSURANCE and income tax “would deliver major simplification” the Office of Tax Simplification has said, but it stopped short of recommending it.

The report, released today, said that it had emerged throughout the review that merging NI and income tax is a “long-term project” that would simplify the tax system. However, it said that although this was “beyond the current remit of the OTS”, it was an area “deserving of a full review” alongside capital gains tax, inheritance tax, environmental taxes and employee benefits.

Of the 155 reliefs that the review looked at, it recommended that 54 remain unchanged, 37 be looked at in more detail and 47 be abolished. A further 17 should be simplified, the report said.

Among those to be simplified included: entrepreneur’s relief, which should incorporate a simple checklist to guide an individual as to whether they qualify; the principal private residence relief, with reviews around each particular condition, but no wholesale replacement; real estate investment trusts, which is currently subject to a separate review; and the introduction of a checklist for the four reliefs covering the enterprise investment scheme.

The report recommended the abolition of: the late night taxi relief, as the people it covers are working late on a regular basis, and therefore it is losing its rationale; trade union subscriptions; and the business premises renovation allowance.

The report can be found on the OTS website.

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