NIC reform

 OTS proposes NICs shake-up

The Office of Tax Simplification has proposed changes to the way NICs are calculated which could see higher earners paying hundreds of pounds more a year, while easing the tax burden on temporary workers. The OTS suggests the “outdated system” needs to be reformed by moving to an annual, cumulative and aggregate (ACA) basis for employees’ NICs and basing employers’ NICs on whole payroll costs. The proposal has been welcomed by both the LITRG and the CIOT. Robin Williamson, LITRG’s Technical Director, said: “People will have a better chance of knowing what they are paying, and what for, in contrast to the current confused picture.” And the CIOT’s Colin Ben-Nathan said aligning the way that employee NICs are charged on earnings with the way income tax is charged on employment income was sensible. However, the ACCA’s Chas Roy-Chowdhury warned that some workers could find themselves worse off. “Middle-class workers are really going to be affected by these changes. The Government really needs to be looking at the impact on them and must make sure that they don"t lose out,” he stated.

Financial Times (15/11/2016)