The consultation on the integration of income tax and NICs that was to start after the March Budget has now been put on ice until after the summer. This is due to the technical challenges posed by uniting the operations of the two taxes (yes NIC is a tax for all intents and purposes) and the disruption this may cause to employers' payroll systems.
Creating one singular levy is a complex issue and is a mammoth task, involving great technical and administrative hurdles that will have to be overcome.
In addition to this the Government is also examining “the interplays between options for integration and reforms to the welfare system.” This includes the Budget proposal to reform the state pension into a single tier pension. Furthermore, it also coincides with the overhaul of the PAYE system in the form of Real Time Information (RTI).
The Government has reaffirmed its commitment to exploring the unification of tax and NICs, that would effectively bring about the end of IR35, and will provide an update in the autumn.
The biggest technical hurdle is that a harmonised system will very clearly show how much tax you pay, rather than the government pretending tax is the income tax rate, then and adding NICs on top of this, then taking another cut in employers NICs on top of that.
Technically, it will be very difficult to pretend we are not massively overtaxed when all of this is rolled up into a single rate.
Not surprised the goverment and civil service want to kick this into the long grass – however, the taxpayers who are having their pockets emptied by high tax will be more than happy to have this out in the open