Budget Must Simplify Business Taxes, says FPB
The Government has already pledged a “Budget for enterprise”, but for small firms to fill the economic vacuum the Chancellor must simplify the tax system, the Forum of Private Business (FPB) has said.
The FPB has welcomed a recent report from the Office of Tax Simplification (OTS) which recommends that the Government should merge income tax and National Insurance (NI) payments – saying that the current system is unclear and time consuming for employers.
“Having one figure instead of two would give the employer a clearer idea of the overall cost of employment and simplify their payroll.”
said FPB research projects manager, Thomas Parry.
“In the past NI has been used as a stealth tax and it’s not always apparent to the employer what they are paying and what the employee is paying.”
“If NI and income tax were merged, firms would send off their accounts to be verified and there would only be one calculation to make rather than two, which would save a lot of time. This Government has made a lot of noises about simplifying regulation for businesses, and it set up the OTS for this reason, so we are hopeful that they will make this change in the Budget.”
A 2007 tax review by the Institute for Fiscal Studies showed that aligning the earnings periods of the two taxes alone would save employers up to £55.6 million a year in administration costs.
The FPB has also called for tax to be simplified for the self-employed, to encourage more people to start up. Parrey ended by saying:
“If there was more of a tax incentive to be self-employed, we wouldn’t need the complicated IR35 legislation which is in place to stop self-employed people from avoiding tax by pretending not to be.”