Budget 2011: NI and income tax could be merged

23rd March 2011

Commentators say such a move will be very difficult which is why George Osborne is planning a consultation this year to study the move so it won't be having an impact on tax bills yet.

If it went ahead it would bring basic rate tax to 32 per cent in a new combined system.

Speaking in the House of Commons, Osborne said:  "This will dramatically simplify the tax system. For decades we have run national insurance and income tax as two different taxes and forced businesses large and small to operate two different system of administration. The resulting anomalies are legion and it imposes totally unnecessary cost and complexity on employers."

The move in reported here on Citywire. Thisismoney also reported the proposed change in a Q&A form.

Osborne made clear that retired people will be exempted so those pensioners who pay income tax will not see their bills rise.

However as Guardian Money Editor Patrick Collinson pointed out the self employed have not been exempted, or at least were certainly not mentioned in the speech.

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