Merging Income Tax and National Insurance

Neil asked Treasury Minister's about merging Income Tax and National Insurance into a single income tax. Since receipts from both taxes go into the same general pot, Neil advocated gradually merging the two taxes to make the tax system simpler and clearer.

Neil: If he will make an assessment of the potential merits of merging income tax and national insurance.

Financial Secretary to the Treasury (Mel Stride): The Government are committed to simplifying the tax system. In 2015, we asked the Office of Tax Simplification to provide an independent assessment of the alignment of income tax and national insurance contributions. We have already taken action in a number of places highlighted by the report. However, alignment now would cause significant upheaval for millions. Now is not the right time for further reform in this area.

Neil: I welcome my right hon. Friend to his new ministerial role. Last year the Office of Tax Simplification said that bringing national insurance and income tax closer together would create a simpler and fairer system for business and taxpayers. As national insurance and income tax revenues go into the same pot, would it not be simpler and clearer to merge the two and have one single income tax?

Financial Secretary to the Treasury (Mel Stride): As I said, we recognise the value of merging national insurance and income tax where that is practical and achievable, and there are some measures coming up in the Bills in the autumn that will address that in certain circumstances, but to do it right across the piece at this stage is perhaps a long-term aspiration rather than one we will be addressing in the short term.