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IPPR proposes combined income tax

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The IPPR Commission on Economic Justice has published a paper proposing a reform to the structure of income tax in the UK and the removal of NICs. This would apply a single rate of tax to each individual by reference to their total income, so that income from labour, property and dividends would all be taxed at the same rate.

The paper, ‘Tapering over the tax’ (http://bit.ly/2oG9JPh), uses illustrations showing a system based on progressive, linear increases up to a higher threshold of around 50%. The ICAEW tax faculty comments that this ‘formula-based approach could raise more tax overall, while of course spreading the tax burden more evenly and progressively as income levels rise.’ However, the ICAEW also notes that important questions remain, such as what would replace employers’ NICs.

The paper also suggests payslips could continue to itemise hypothecated payments out of the new combined income tax to fund national insurance.

The ICAEW welcomes the paper as coming ‘at an opportune moment and will hopefully help drive the UK to an informed public debate on the scope, rate and purpose of NIC’.

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