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Budget 2014: 12 predictions

by Michelle McGagh on Mar 17, 2014 at 09:10

National Insurance contributions

While the chancellor has recently backed a bill calling for national insurance (NI) and income tax to be merged into an all-encompassing ‘earnings tax’ there are no clues that this will happen this year.

Riches said she would like to see the NI contribution threshold brought into line with the personal allowance for income tax, which would prove the government is serious about lifting the poorest out of tax.

‘The chancellor talks about lifting the low paid out of taxation but he leaves them paying NI – a tax in almost everything but name,’ she said.

‘While the threshold for income tax will be £10,000 from 6 April 2014, employee NICs start at 12% on earnings above £7,956. So someone earing £10,000 a year is clearly not lifted out of tax as they pay £245 a year in NICs.’

She called for the NI threshold to be ‘nudged up ahead of inflation towards the income tax threshold’.

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