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National Insurance Contributions: Earnings Limits

Volume 477: debated on Friday 20 June 2008

To ask the Chancellor of the Exchequer (1) what assessment he has made of the merits of alignment of the upper earnings limit for National Insurance contributions with the higher rate threshold for income tax; and if he will make a statement; (206650)

(2) if he will estimate the value in terms of reduced costs to (a) business and (b) HM Revenue and Customs of alignment of the upper earnings limit for national insurance contributions with the higher rate threshold for income tax.

To ask the Chancellor of the Exchequer what his policy is on the alignment of national insurance and tax thresholds; and if he will make a statement. (208418)

The Government remain committed to bringing the income tax and the national insurance contributions (NICs) systems closer together. The overall aim is to improve fairness and coherence, to reduce administrative burdens, and to make the two systems easier to understand.

There has already been progress in aligning tax and NICs in terms of a simplified structure of employers’ NICs, replacing multiple rates with a single rate and abolishing the entry fee. With just two main rates of income tax and two main rates of national insurance in this tax year, the UK’s personal tax system is already one of the simplest personal tax structures of any developed country.

Nevertheless, the Government are continuing to look at the scope for further alignment of tax and NICs taking into account the changes made on 13 May, and in future pre-Budget and Budget reports.