National Insurance Could Be Axed!
The Government has been urged to cut taxes we pay on our earnings and it could be good news for those workers who are on a lower wage.
As it stands, workers have to pay national insurance as well as income tax on their earnings but the government are apparently going to try and simplify things.
The Office for Tax Simplification has confirmed it is exploring the idea of ditching NI entirely.
Gary Smith, financial planner for Tilney Bestinvest has told The Mirror that if national insurance was scrapped, a worker earning £20,000 a year could save £532.80 a year!
Gary Smith says: “It is good news for those on lower incomes as they will pay less even though their tax rate will increase to 32%. While it sounds like a tax hike, it will be tax relief.”
Currently we have to earn £8,060 a year before we start paying National Insurance and £10,600 before we start paying income tax. The Government has already promised to increase the income tax-free allowance to £12,500 by 2020.
A Treasury spokeswoman said: “The Government wants the tax system to be easy to understand and simple to use. Merging national insurance contributions and income tax would be a difficult task – something the independent Office of Tax Simplification themselves acknowledge – but we recognise there is potential to do more to make them easier to understand. That’s why we’ve agreed with the OTS that they will look at the closer alignment of the two systems and report back by Budget 2016.”
What do you think about this proposal?