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CIOT comments on income tax and NICs changes

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The CIOT has welcomed the proposal to align the income tax and NICs thresholds but highlights a number of practical points:

  • the effective annual thresholds for NICs will be £11,908 for 2022/23 (rather than aligning with the income tax personal allowance of £12,570) because the increase will not take effect until July;
  • the UK government appears to be taking contrasting approaches to income tax and NICs, with the proposed cut to the basic rate of income tax and the freezing of thresholds, but increasing the thresholds for NICs;
  • the NICs upper earnings limit aligns with the UK income tax higher rate band threshold, highlighting the extra tax burden in Scotland where the 41% higher rate threshold is set at £31,092 of taxable income rather than £37,700; and
  • divergence between UK and Scottish income tax could widen, unless the Scottish government decides to review its policy of freezing income tax rates and bands until the end of the current parliament in 2026.
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